Salesforce's AI-Driven Reinvention: Can It Restore Growth and Investor Confidence?

Salesforce’s recent earnings performance and AI initiatives present a paradox: a company with a dominant position in enterprise software and a bold vision for AI-driven reinvention, yet one that has struggled to rekindle investor confidence amid slowing growth and macroeconomic headwinds. As the company prepares to release its Q2 2026 results on September 3, 2025, the question looms: Can Salesforce’s AI transformation restore its growth trajectory and justify its current valuation?

Earnings Performance: Modest Growth, Mixed Signals

Salesforce’s Q2 2026 results are expected to show revenue growth of approximately 8.7% year-over-year, with total revenues projected between $10.11 billion and $10.16 billion [1]. Non-GAAP earnings per share are anticipated to rise by 8.2%, reflecting improved operational efficiency and cost-cutting measures [1]. These figures, while positive, fall short of the double-digit growth rates that once defined Salesforce’s trajectory. The company’s current remaining performance obligation (cRPO) of $26.5 billion, up 10% year-over-year, suggests a pipeline of future revenue, but investors remain skeptical about near-term execution [2].

The challenge lies in translating AI innovation into measurable financial impact. Agentforce, Salesforce’s AI platform for automating customer service, has generated $100 million in annual recurring revenue (ARR) within two quarters of its launch, with over 4,000 paid deals and 8,000 total transactions [3]. However, this pales in comparison to the $1.1 billion in AI ARR driven by Einstein AI and Data Cloud in 2025 [4]. Analysts argue that while these tools demonstrate technical promise, their ability to scale and monetize remains unproven [5].

AI Initiatives: A Strategic Pivot, But Execution Risks Linger

Salesforce’s AI strategy hinges on two pillars: Agentforce and Einstein AI. Agentforce 3.0, launched in Q2 2026, introduces agentic reasoning capabilities, enabling real-time digital coaching and decision-making [6]. Meanwhile, Data Cloud’s expansion to 22 trillion records—a 175% year-over-year increase—positions Salesforce as a key player in enterprise data management [7]. These innovations align with the broader trend of AI-driven digital transformation, yet adoption has been uneven.

The company’s $8 billion acquisition of Informatica underscores its commitment to AI readiness, aiming to harmonize enterprise data for generative AI applications [8]. However, integration risks and execution delays could undermine this strategy. For instance, while Agentforce resolves 84% of customer inquiries autonomously, concerns persist about its ability to replace legacy CRM systems or reduce demand for seat-based software [9]. Competitors like Oracle and Microsoft, which have more mature AI ecosystems, continue to outpace Salesforce in cloud growth and enterprise adoption [10].

Investor Sentiment: A Divided Market

Salesforce’s stock has declined 23–25% year-to-date, making it one of the worst-performing large-cap tech stocks in 2025 [11]. This underperformance reflects investor frustration with the company’s inability to deliver consistent double-digit growth. Yet, there are glimmers of optimism. The company’s forward P/S ratio of 5.62X, below the industry average of 8.43X, suggests undervaluation [12]. Analysts at BMO and Morgan Stanley have reiterated “Outperform” ratings, citing Salesforce’s recurring revenue model and profitability improvements [13].

The Dreamforce 2025 conference in September 2025 could serve as a pivotal moment. If Salesforce can showcase concrete AI monetization strategies—such as expanding Agentforce into new industries like pharmaceuticals—investor sentiment may shift. Conversely, a lack of tangible progress could deepen skepticism. Activist investors like Starboard Value have increased stakes in the company, signaling belief in its long-term potential, but institutional selling by insiders like CEO Marc Benioff highlights lingering uncertainty [14].

Strategic Risks and Opportunities

The path forward for Salesforce is fraught with both opportunities and risks. On the positive side, global expansion into Europe and the Asia-Pacific region offers growth potential as emerging markets adopt AI and cloud solutions [15]. Additionally, Salesforce’s cost-restructuring initiatives—such as workforce reductions and optimized office spaces—have boosted non-GAAP operating margins to 32.3% in Q1 2026 [16].

However, macroeconomic headwinds, including slower deal cycles and cautious spending by small businesses, threaten to dampen growth [17]. Moreover, the long-term impact of AI on Salesforce’s business model remains unclear. While automation enhances efficiency, it could reduce demand for traditional CRM licenses, creating a structural challenge for revenue sustainability [18].

Conclusion: A Test of Execution

Salesforce’s Q2 2026 earnings report will serve as a critical test of its AI-driven reinvention. The company has laid the groundwork for innovation, but execution will determine whether these efforts translate into restored growth and investor confidence. For now, the market remains divided: some see value in Salesforce’s resilient core business and AI ambitions, while others view its challenges as existential. As the company navigates this inflection point, the coming months will reveal whether its AI vision can deliver on its promise—or if it will cede ground to AI-native rivals.

Source:
[1] Salesforce Announces Timing of its Second Quarter Fiscal 2026 Results Conference Call [https://investor.salesforce.com/news/news-details/2025/Salesforce-Announces-Timing-of-its-Second-Quarter-Fiscal-2026-Results-Conference-Call/default.aspx]
[2] Salesforce Announces Third Quarter Fiscal 2025 Results [https://www.salesforce.com/news/press-releases/2024/12/03/salesforce-announces-third-quarter-fiscal-2025-results/]
[3] FY26 Q2 Product Releases and Corporate Announcements [https://www.salesforce.com/news/stories/fy26-q2-highlights/]
[4] Salesforce Q2 '26 Earnings: What to Expect Next Week [https://www.salesforceben.com/salesforce-q2-26-earnings-what-to-expect-next-week/]
[5] Salesforce's Struggling Stock Needs Earnings to Show AI Progress [https://finance.yahoo.com/news/salesforce-struggling-stock-needs-earnings-102306152.html]
[6] Salesforce Before Q2 Earnings: Should You Buy, Sell or Hold [https://finance.yahoo.com/news/salesforce-q2-earnings-buy-sell-120900140.html]
[7] AI Adoption and Cloud Growth to Boost Salesforce's Q2 Earnings [https://www.nasdaq.com/articles/ai-adoption-and-cloud-growth-boost-salesforces-q2-earnings]
[8] Is Salesforce's AI Transformation Enough to Justify a Long-Term Buy? [https://www.ainvest.com/news/salesforce-ai-transformation-justify-long-term-buy-2509/]
[9] Salesforce Investors Hope for Faster Growth, AI Progress in Earnings [https://www.cnbc.com/2025/09/02/salesforce-investors-hope-for-faster-growth-ai-progress-in-earnings-.html]
[10] Salesforce Q2 Earnings Preview: 5 Things to Know [https://www.crn.com/news/ai/2025/salesforce-q2-earnings-preview-5-things-to-know]
[11] Salesforce Stock (CRM) Opinions on Upcoming Earnings Report [https://www.quiverquant.com/news/Salesforce+Stock+%28CRM%29+Opinions+on+Upcoming+Earnings+Report]
[12] Salesforce Before Q2 Earnings: Should You Buy, Sell or Hold [https://www.nasdaq.com/articles/salesforce-q2-earnings-should-you-buy-sell-or-hold-stock]
[13] Salesforce CRM Stock Eyes 34.7% Upside Amid AI Growth [https://www.ainvest.com/news/salesforce-crm-stock-eyes-34-7-upside-ai-growth-expert-ratings-shift-2509/]
[14] Salesforce’s Struggling Stock Needs Earnings to Show AI Progress [https://www.bloomberg.com/news/articles/2025-09-03/salesforce-s-struggling-stock-needs-earnings-to-show-ai-progress]
[15] AI Adoption and Cloud Growth to Boost Salesforce's Q2 Earnings [https://finance.yahoo.com/news/ai-adoption-cloud-growth-boost-144400623.html]
[16] Salesforce Q2 Earnings Ahead: Street Sees Over 8% Increase in Both EPS and Revenue [https://seekingalpha.com/news/4491302-salesforce-q2-earnings-ahead-street-sees-over-8-increase-in-both-eps-and-revenue]
[17] Salesforce’s Struggling Stock Needs Earnings to Show AI Progress [https://finance.yahoo.com/news/salesforce-struggling-stock-needs-earnings-102306152.html]
[18] Salesforce Before Q2 Earnings: Should You Buy, Sell or Hold [https://www.nasdaq.com/articles/salesforce-q2-earnings-should-you-buy-sell-or-hold-stock]