Salesforce Just Delivered Its “AI Breakout Quarter”—But Is the Stock’s Big Jump a Tax-Loss Trap?

Salesforce’s third-quarter results weren’t just a relief to a bruised shareholder base—they offered the first credible signs that the long-anticipated AI-driven reacceleration may finally be taking shape. After a year in which the stock fell nearly 30% and sentiment cratered under fears of AI disruption and slowing core growth, Q3 provided just enough fuel to reignite the debate over whether CRM is quietly becoming one of the most attractive value-plus-AI setups in large-cap software. The market reacted favorably at first, with shares popping after the print, but the rally stalled almost immediately around the $240 level—a reminder that investors are still happy to sell strength in tax-loss candidates unless Salesforce delivers consistent follow-through.

At the headline level, the company exceeded analyst expectations on profitability while essentially matching on revenue. Adjusted EPS of $3.25 demolished the $2.86 consensus, driven by a non-GAAP operating margin of 35.5% versus the Street’s 34.1%. Revenue came in at $10.26 billion—technically a hair below the $10.27 billion consensus but close enough that the miss never registered as a meaningful concern, especially given stronger-than-expected Q4 guidance. Subscription revenue grew 10% year-over-year in constant currency, while cRPO accelerated to 11.4%—above Salesforce’s 10–11% outlook and a crucial data point for investors looking for signs that bookings growth is beginning to outpace revenue.

The bigger question heading into the print was simple: Is this the turnaround story investors have been waiting for? The answer isn’t a resounding yes—but it is, at minimum, a credible “maybe.” The strongest evidence came from bookings and pipeline trends. Net new AOV outgrew AOV for the first time since FY22, Agentforce customer adds surged 50% quarter-over-quarter, and Salesforce reported more than 9,500 paid Agentforce deals to date—up from 6,000 just a quarter ago. Needham called the quarter “the first of many bright AF quarters,” arguing that accelerating customer adoption, combined with a mid-teens EV/FCF valuation, makes CRM look “highly attractive” if the trend persists.

The AI narrative, which has defined CRM’s volatility all year, finally had substance behind it. While AI revenue itself remains immaterial—something BofA emphasized—nearly every AI-linked leading indicator strengthened. Agentforce ARR reached roughly $540 million, up 330% year-over-year, and total AI/Data ARR topped $1.4 billion, up 114% year-over-year. Agentforce processed more than 3.2 trillion tokens, and bookings from Agentforce and Data 360 came increasingly from existing customers expanding their usage—a powerful sign of early utility. Marc Benioff leaned into the momentum, calling Q3 “the best quarter we’ve had in three years” and framing the company’s strategy around building the “agentic enterprise,” a market he believes is only just beginning to materialize.

Analysts agree—mostly. Stifel reiterated a Buy and a $300 PT, emphasizing that Salesforce’s post-Dreamforce momentum finally showed up in the numbers. Stifel noted that fears of AI disruption seem increasingly misplaced, arguing the real story is that “near-term Agentforce adoption, core stability, and customer expansion all point in the same direction.” Canaccord maintained its Buy rating with a $300 PT, calling Agentforce the company’s biggest product cycle since Service Cloud in 2009. It highlighted the 23% expansion in sales capacity and improving bookings trajectory, adding that the stock’s ~14x EV/FCF valuation looks sustainable—if not cheap—for a company whose FCF/share is growing close to 20%.

But not everyone was willing to declare the all-clear. Citi, maintaining a Neutral rating, acknowledged the quarter as “incrementally positive” but argued investors still need evidence of sustained revenue acceleration. JPMorgan was more optimistic, noting that Salesforce has “transformed into a highly profitable and cash-generating business,” but the skepticism about whether AI can produce meaningful reacceleration remains a key friction point. Wedbush described the results as “a step in the right direction” while cautioning that the Agentforce strategy requires multiple quarters of consistency to fully win over institutions.

Guidance helped CRM’s cause. The company raised full-year revenue guidance to $41.45–$41.55 billion, reflecting 9–10% growth, and Q4 revenue guidance of $11.13–$11.23 billion topped consensus by more than $200 million. The Informatica acquisition contributed modestly to this outlook, while margins remained solid—Salesforce maintained its full-year non-GAAP operating margin target of 34.1%. Free cash flow also grew 22% year-over-year, allowing the company to return $4.2 billion to shareholders in the quarter through buybacks and dividends.

Still, growth remains slower than the Salesforce of old. Revenue growth decelerated from 10% in Q2 to 9% in Q3, and the company faces sector-specific softness in communications, media, manufacturing, and energy. This backdrop is one reason investors aren’t ready to chase the post-earnings bounce. With the stock down sharply in 2025, CRM sits squarely on tax-loss harvesting lists—meaning short-term rallies near $240 risk becoming liquidity events rather than breakouts unless the next quarter reinforces this momentum.

So is this the beginning of a true turnaround? The evidence is mounting, but it’s not yet definitive. The AI story finally has numbers behind it. Bookings are improving. Margins remain impressive. Guidance is strong. And analysts overwhelmingly see the risk-reward skewing positive—especially if AI adoption transitions from experimentation to scale in FY27, as multiple firms now project.

But Salesforce is still fighting the gravity of slowed core growth, investor fatigue, and a year of intense competition and skepticism around generative AI adoption. The stock’s stall at $240 shows that investors want proof, not promises.

If CRM delivers another quarter like this—or better—then yes, the turnaround story may finally be real. If not, Q3 could end up remembered as a well-timed exit opportunity in a tax-loss year.