Salesforce Stock Dips as AI Transition Tests Growth Resilience

Salesforce's stock has reached historically low valuations, driven in part by investor concerns over the disruptive potential of artificial intelligence in the enterprise software market. The company is preparing to release its third-quarter earnings report on December 3, 2025, with analysts forecasting $2.86 per share in adjusted earnings and $10.3 billion in revenue according to Barrons. This report will be closely watched for insights into Salesforce's AI-driven transformation and whether it can reignite double-digit sales growth.

The company has long been a leader in customer relationship management (CRM) software, but growth has slowed as the market nears saturation. Sales rose by 8.7% in fiscal year 2025 and are expected to remain at that level in 2026. However, free cash flow has improved, with margins rising from 20% in 2023 to 33% in 2025 according to Barrons. Salesforce has used this increased cash flow for dividends and buybacks, reducing its share count by nearly 4%.

Investors are also keeping a close eye on how Salesforce is integrating AI into its core products. The company has launched AI agents designed to automate complex workflows and is pushing enterprise customers to adopt these tools. As of the fiscal second quarter, Salesforce had secured $440 million in annual recurring revenue from agentic AI products, a more than 400% increase from the previous year.

What Analysts Are Watching

The key question for investors is whether AI will enhance Salesforce's offerings or cannibalize its traditional software revenue. The company's CEO has emphasized that AI is a growth driver, not a threat, and has outlined a long-term vision to expand AI adoption across the enterprise. At its Dreamforce conference in October, Salesforce announced that AI could boost revenues by over 10% annually, potentially reaching $60 billion by 2030.

Analysts are divided on how quickly this vision can become reality. Some, like BNP Paribas's Stefan Slowinski, believe Salesforce is well positioned to reverse the negative sentiment surrounding software-as-a-service (SaaS) companies by accelerating adoption of its AI tools. Others remain skeptical, noting that enterprise customers have been cautious about AI integration. This uncertainty has contributed to a 29% decline in Salesforce's stock this year according to Morningstar.

The company is also testing new pricing models to boost revenue growth. In August, Salesforce raised prices on its top-tier plans, a move analysts say could help offset slower sales growth as more customers pay for AI features. Subscription revenue growth in the most recent quarter was 9% in constant currency, suggesting some progress in this area.

Risks to the Outlook

Despite Salesforce's strategic shifts, there are risks to the AI-driven growth narrative. One major concern is the pace at which customers are willing to adopt AI-powered workflows. As seen with Microsoft, enterprise clients are being careful, fearing disruptions to existing systems and data security issues. Salesforce has been more open than many competitors about its AI performance metrics, but even its own data shows that AI adoption is still in early stages according to Barrons.

Another challenge is the competitive landscape. Salesforce is not the only enterprise software giant investing heavily in AI. C3.ai, for instance, has also made significant strides in AI application development and operates a comprehensive AI platform and generative AI tools. As more competitors enter the space, Salesforce may find itself in an increasingly crowded market.

What This Means for Investors

For investors, the coming weeks are critical in determining the trajectory of Salesforce's AI transformation. The earnings report on December 3 will provide a snapshot of how well the company is adapting to the AI-driven future. If Salesforce can demonstrate that AI is not only not cannibalizing its core business but also expanding its customer base and increasing revenue, the stock could see a turnaround.

Analysts have also pointed out that Salesforce's valuation has become more attractive in recent months. With a 29% drop in stock price this year, some investors view it as a buying opportunity. BNP Paribas's Stefan Slowinski has cited a rebound in spending intentions for Salesforce products among resellers as a positive sign. Deutsche Bank's Brad Zelnick has also called out the "excessive negative sentiment" around the stock, suggesting that a correction may be on the horizon.

As the final month of 2025 unfolds, the broader market remains in flux. Volatility is expected to continue as investors balance optimism over long-term productivity gains with short-term uncertainty. For Salesforce, the next few quarters will be crucial in proving that its AI strategy can deliver not just incremental improvements but a fundamental reinvigoration of its growth story.