Salesforce's crm stock falls 28% in 2025 amid tech sector growth disparities

Salesforce, Inc. (NYSE:CRM) has experienced a tumultuous year, marked by a substantial 28% decline in its stock price in 2025, highlighting significant challenges within its growth trajectory. This decline reflects broader trends in the technology sector, where competitors like SAP SE, Microsoft Corporation, and Oracle Corporation have seen contrasting growth, showing increases of 18.7%, 23.9%, and 50.1% respectively. Despite its dwindling stock performance, optimism remains, particularly from Bank of America Securities which reaffirmed its "Buy" rating on Salesforce's stock with a price target of $350, expecting recovery in Service Cloud growth.

Analysts led by Bradley Sills predict growth in Salesforce’s Service Cloud business in the coming quarters, estimating FY 2026 Service Cloud revenue at $9.7 billion—comprising 25% of the total subscription revenue. They foresee an acceleration in Service Cloud growth from 9% to potentially 12% longer term, driven by add-ons and upsells. This outlook aligns with Salesforce’s expectations of a currency tailwind for the business due to a weakening US dollar. Furthermore, the company anticipates Q2 2026 revenue guidance between $10.11 billion and $10.16 billion, marking an 8%-9% year-over-year increase.

However, despite these positive analyst predictions, Salesforce’s overall growth has faced criticism. The first quarter of fiscal 2026 saw revenue growth of just 7.7% and non-GAAP earnings per share growth of 5.7%, a deceleration from previous years of steady double-digit revenue increases. Analysts foresee persistent mid-to-high single-digit growth for fiscal 2026 and 2027, reflecting cautious enterprise spending amid global economic uncertainty.

The year-to-date performance of Salesforce underscores the competitive pressure in the SaaS sector, where AI-driven automation is reshaping customer engagement and operational efficiency. Salesforce’s 3.26% stock decline on August 11, 2025, highlights the intensified competition in high-growth, low-margin environments dominated by scalable AI-driven solutions. While AI agents offer enhanced personalization and structural advantages, investors remain concerned about pricing models and Salesforce's ability to maintain margins amidst changing market dynamics.

Additionally, Salesforce's valuation poses questions for potential investors. Trading at a forward 12-month price-to-earnings (P/E) multiple of 20.08—far below the sector average of 28.15—some view its discounted valuation as a possible value trap rather than an opportunity. This slump, combined with ongoing sales growth challenges, raises doubts about the company's former status as a growth powerhouse.

Market participants will closely observe Salesforce's upcoming financial results, which are set to be announced on September 3, 2025. Expectations for this announcement include an earnings per share (EPS) of $2.77, indicating an 8.2% increase from the prior-year quarter. Analysts have projected revenue for the quarter at $10.13 billion, representing an 8.66% rise from the previous year.

Salesforce’s full-year projections, as per the Zacks Consensus Estimates, foresee earnings of $11.3 per share and revenue of $41.15 billion—a year-over-year growth of 10.78% and 8.58% respectively. Notably, recent changes in analyst estimates are pivotal, reflecting business trends that could influence stock price performance. Moreover, despite a challenging year in terms of stock performance, Salesforce's industry rankings and advisories such as Zacks Rank characterize its operational and financial health amidst a shifting technological landscape.

In sum, Salesforce finds itself at a critical juncture. With its slowed growth and changing market dynamics, the firm must strategically adapt to remain competitive. Until Salesforce demonstrates a viable plan for revitalizing growth, analysts advise caution in considering further investment, suggesting that there may be better prospects within the broader tech sector.