Is Salesforce (CRM) Poised for a Comeback in 2026? A Deep Dive into Undervaluation and Fundamentals

The question of whether Salesforce (CRM) can stage a meaningful recovery in 2026 hinges on two critical pillars: its valuation relative to peers and the strength of its underlying business fundamentals. After a tumultuous 2025 marked by a 30% stock decline and skepticism over its AI strategy, the company now faces a pivotal test of its long-term resilience. This analysis examines Salesforce's current valuation, financial performance, and institutional dynamics to assess its potential for a turnaround.

A Discounted Valuation in a Premium Sector

Salesforce's forward P/E ratio of 21 times blended earnings stands out as a compelling anomaly in the cloud-software sector. This metric trails the S&P 500's forward P/E of 22.3 and lags behind peers with stronger AI integration, which trade at premiums. For context, Oracle's AI investments-though controversial-have driven valuations far above this benchmark according to Bloomberg. Salesforce's low multiple suggests the market is pricing in significant risks, particularly around its AI-driven transformation. Yet, this discount may overstate the company's challenges, given its robust financials and early traction in AI.

Strong Fundamentals: Revenue, Cash Flow, and AI Momentum

Salesforce's Q4 2025 results underscored its operational durability. Revenue hit $10.0 billion, an 8% year-over-year increase, while operating cash flow surged 28% to $13.1 billion according to earnings. Its contract value (cRPO) grew 11% to $30.2 billion signaling durable demand. Crucially, the Agentforce AI platform-launched in late 2024-has become a growth engine. With a $500 million annual run rate and a 330% YoY increase, Agentforce has closed over 5,000 deals, 3,000 of which are paid according to Q4 earnings. Beyond revenue, the platform's internal value is evident: it resolved 84% of customer-service interactions on help.salesforce.com, with only 2% requiring human intervention according to Q4 earnings. These metrics suggest Agentforce is not just a buzzword but a tangible productivity tool gaining traction.

Institutional Confidence and Ownership Shifts

Institutional ownership data reveals a mixed but telling picture. While some heavyweights like Hudson Bay Capital reduced stakes by 142.8%, others-including AIA Group (up 128.7%) and Alyeska Investment Group (up 285.4%)-signaled renewed confidence according to MarketBeat. As of October 2025, institutional ownership remained robust at 85.10% according to Trendlyne, with The Vanguard Group retaining a 9.3% stake as the largest holder according to Yahoo Finance. This bifurcated institutional response reflects both caution and opportunistic positioning. The public's 15% ownership stake also suggests retail investors may yet play a role in catalyzing a rebound.

Analyst Skepticism vs. Long-Term Potential

Analysts remain divided. A Bloomberg report notes that Salesforce must "prove software's staying power in the AI age" to regain investor trust, while a Wall Street Journal article highlights the company's struggle to align its AI strategy with market expectations. However, the stock's 30% decline in 2025 has created a margin of safety. At current levels, Salesforce trades at a discount to its historical averages and peers, even as it generates $500 million annually from Agentforce-a platform that rivals have yet to match in execution.

The Case for Strategic Entry

For investors, the calculus depends on risk tolerance and time horizon. Salesforce's 2026 guidance-7-8% revenue growth according to an earnings call-is conservative but achievable given its cash flow strength and AI momentum. The company's ability to convert Agentforce's internal value into broader market adoption will be critical. If successful, the current valuation offers a compelling entry point. Conversely, persistent execution risks or AI missteps could prolong underperformance.

In conclusion, Salesforce is neither a sure bet nor a lost cause. Its discounted valuation, strong cash flow, and AI-driven growth metrics present a compelling case for a 2026 comeback, provided the company can address lingering doubts about its strategic direction. For those willing to navigate the volatility, the stock's fundamentals suggest a path to outperformance-if not in the near term, then over the longer horizon.