Salesforce Stock Soars Despite Overbought Warning Signs

Salesforce's stock has been on a tear since June, surging over 70% in value. The company's latest earnings report only added fuel to the fire, with revenue growing at an 11% year-over-year rate and contracted future revenue accelerating.

The results countered one of the major fears hanging over the software industry: that artificial intelligence would lead companies to abandon expensive software platforms. Instead, Salesforce's customers are staying put and spending more, suggesting those fears may have been overdone.

Management also raised guidance for the year, which helped explain why shares jumped nearly 25% from their pre-earnings level. The company's progress in AI has been particularly noteworthy, with its flagship suite of tools growing at a blistering pace and recurring revenue more than tripling over the past year.

The relative strength index (RSI) is currently above 80, indicating that the stock may be overbought. However, analysts are still optimistic about Salesforce's prospects, with some price targets as high as $400. While a pullback may be due, the company's long-term case remains compelling.