Salesforce Spends Record $27B on Stock Buybacks Amid AI Fears

Salesforce's stock price has dropped by nearly half since its previous high due to concerns over the 'SaaSpocalypse,' or the fear that artificial intelligence (AI) agents will reduce corporate spending on software-as-a-service (SaaS) products. Despite this, CEO Marc Benioff remains confident in his company's growth trajectory, as evidenced by a record-breaking $27 billion spent on stock buybacks in the first quarter ending April 30.

This massive capital return represents nearly 19% of Salesforce's market cap and signals management's belief that the current market price undervalues the company's long-term earnings power. The repurchase also lifted earnings per share, with diluted shares outstanding falling by 11% in the quarter.

Salesforce's AI strategy appears to be strengthening its business, rather than disrupting it. Agentforce, a key product, saw annual recurring revenue reach $1.2 billion in fiscal Q1, up 205% year over year. Customers are increasingly embedding these tools into their daily workflows, with tokens processed surging by 152% quarter-over-quarter.

The company's continued revenue growth and strong free cash flow provide the financial flexibility to fund buybacks at this scale. However, investors may still see the pullback as an attractive entry point, given the stock's forward price-to-earnings multiple of 14.