CRM Preview: CFRA Zino: “AI Is Going to Eat Software”

WATCH: CFRA’s Zino Warns: ‘AI Is Going to Eat Software’ — Why Salesforce Investors Must Watch This Interview

In a recent interview with AInvest’s Adam Shapiro, CFRA senior analyst Angelo Zino offered candid views on Salesforce’s evolving strategy, underscoring both the potential and the pitfalls as the company doubles down on artificial intelligence. The discussion centered less on the minutiae of quarterly numbers and more on the tectonic shifts reshaping the software industry, with Zino arguing that Salesforce’s future depends on proving it can harness AI to offset structural risks in its core business.

Zino was blunt about what he believes matters most in Salesforce’s coming earnings. “I don’t even think the numbers matter as much as maybe they once did,” he said, stressing that investors are scrutinizing whether SaaS companies like Salesforce can withstand disruption from AI. “More importantly is going to be the AI strategy that they articulate, right? And if Salesforce can continue to show that they are witnessing greater momentum for their agentic AI platform, which we think they are, that’s going to help the story, especially at these valuations.”

The point highlights a key tension: while Salesforce has consistently delivered modest beats on EPS and revenue, Zino believes the Street is less focused on incremental execution and more on whether AI-driven consumption models can be scaled. At present, Salesforce’s AI-oriented revenues remain “low single digit in terms of percentage of sales,” he said, adding that material contributions may not arrive until 2026 or 2027. Investors will need patience.

Informatica and the AI Data Bet

That patience is being tested against Salesforce’s bold acquisition strategy. In Q1, CEO Marc Benioff announced an $8 billion deal for Informatica, calling it a “transformational step” to unify Salesforce’s AI CRM with enterprise-grade data management. Zino noted that Salesforce has advantages: “They were early to the game in terms of rolling out an agentic AI platform. They also have an immense amount of data out there on the enterprise space. And that is a huge advantage in this broader AI spectrum.” Informatica strengthens that edge by giving Salesforce better control over data pipelines and integration, a prerequisite for scaling AI agents.

Still, Zino hedged his optimism: “The jury is still out to be honest with you. The market is extremely competitive.” Integration risk looms, and the company must prove it can extract value from these deals without bloating its cost base. Salesforce has promised accretion to margins and cash flow within two years, but execution will be critical.

“AI Is Going to Eat Software”

Perhaps Zino’s most striking comment echoed NVIDIA’s Jensen Huang: “You kind of go back, you know, 14, 15 years ago when there was this whole thesis, you know, Marc Andreessen came out with where, you know, software was going to eat the world, right? And then Jensen back in, I think 2017 came out and said, yes, you know, software is eating the world, but AI is going to eat software.”

This encapsulates the existential challenge facing Salesforce and its SaaS peers. AI is driving productivity improvements that ultimately lower seat growth, reducing subscription growth potential. Meanwhile, spending priorities are shifting toward AI infrastructure at the expense of traditional SaaS. For Salesforce, the task is to prove that its consumption-driven AI services, such as Agentforce, can generate enough incremental usage to counterbalance slower subscription growth.

Portfolio Risk

Zino also acknowledged that institutional portfolios may rethink their Salesforce exposure. “There’s a risk of it,” he said when asked if Salesforce could be structurally de-emphasized. Competitive pressures from DIY enterprise solutions and emerging rivals like OpenAI exacerbate that risk. While Salesforce’s brand and customer entrenchment provide some insulation, the shifting allocation of capital toward AI-native challengers raises questions about long-term positioning.

The Numbers Still Matter

Even if Zino insists the narrative is paramount, the fundamentals provide context. Salesforce’s Q1 revenue grew 8% year-on-year to $9.83 billion, with non-GAAP EPS of $2.58 ahead of consensus. Margins expanded to 32.3%, free cash flow hit $6.3 billion, and remaining performance obligations rose 13% to $60.9 billion. Agentforce adoption has been rapid, surpassing $100 million ARR with over 4,000 paying customers. Data Cloud also accelerated, managing 22 trillion records, up 175%. These metrics justify Salesforce’s premium valuation, even as its stock has underperformed the S&P 500 this year.

Looking to Q2, consensus calls for EPS of $2.78 on revenue of about $10.14 billion. Analysts generally view those numbers as conservative, given triple-digit ARR growth in AI products and price increases across core clouds. Salesforce guided revenue for the year to $41.3 billion at the high end, raising expectations by $400 million last quarter.

The Bigger Picture

Zino’s analysis reinforces the idea that Salesforce’s trajectory will not hinge on near-term beats but on its ability to navigate AI disruption. “Salesforce will be able to get this figured out. I think they’ll be a beneficiary in terms of this kind of disruption that we’re seeing across the AI space. But… when you look at their core subscriber platform, there is going to be some disruption there,” he cautioned.

For investors, the takeaway is nuanced. Salesforce’s fundamentals remain strong, its valuation relatively undemanding, and its AI initiatives promising. But the pivot comes with risk. AI may indeed “eat software,” and Salesforce must prove its offerings are sticky enough to survive that feast. As Zino summarized, the stock is “probably as most hated as I’ve ever seen in my career,” but that sentiment itself could create opportunity if Salesforce delivers on its AI vision.