Salesforce AI Strategy Shows Signs of Success Despite Slowing Organic Growth

Salesforce's AI strategy appears to be paying off, at least in terms of recurring revenue. The company's Agentforce and Data 360 annual recurring revenue (ARR) reached nearly $3.9 billion, a 210% year-over-year increase. This growth is largely driven by the adoption of Salesforce's AI offerings, with Agentforce ARR exceeding $1.5 billion, up more than 240%. Despite this strong performance, analyst Gil Luria remains cautious, noting that underlying organic growth continues to slow.

Luria raised his price target for Salesforce to $200 from $175 but maintained a Neutral rating. The stock jumped about 12% after earnings as investors focused on the company's improving bookings trends and higher full-year revenue outlook. Salesforce also delivered 3.2 billion Agentic Work Units during the quarter, up 97% sequentially.

However, Luria highlighted a weaker underlying trend, pointing out that organic revenue growth slowed to 6.4% from 8.7% in the prior quarter, excluding Informatica. Despite this, Salesforce raised its fiscal 2027 revenue guidance to $46.1 billion to $46.4 billion and maintained its 34.3% non-GAAP operating-margin forecast.