Key insights
- Traders anticipate an 8% move in Salesforce (CRM) stock following its earnings report, with options pricing suggesting significant volatility. Concerns about AI disruption have pressured the stock, but strong AI offerings could boost sentiment. Analyst views are mixed, with some citing structural AI transition risks while others are bullish on adaptation. Expected revenue growth of 12% YoY and EPS growth are key metrics to watch.
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Salesforce is scheduled to report its latest quarterly earnings after the closing bell today, with traders expecting a large move in the software maker's stock.1
Salesforce (CRM) shares are seen swinging up to about 8% in either direction by the end of the week following the results, according to recent options pricing. A move of that size from Wednesday's close could see shares jump close to $193, recovering some of their recent losses. At the low end, shares could slip below $166.
The Slack parent company's stock has lost roughly a third of its value this year, as worries that AI products will disrupt the software industry have pressured shares of Salesforce and a number of others in the sector in the last several months.
Salesforce's latest results could help boost sentiment around its stock and the broader software sector, if it can show strong demand for its own AI offerings, which could ease worries about disruption.
Bank of America analysts recently relaunched their coverage of Salesforce with an "underweight" rating and $160 price target, writing that they "expect a structural reset driven by AI transition," that could include slow customer growth, limited ability to upsell customers to more of its services, and an "underwhelming" path to monetizing AI.2
Other analysts are more bullish. Deutsche Bank, which holds a "buy" rating and $255 target, forecasted a "seasonally slow but steady start" to the year, and suggested that AI worries "underappreciate the opportunity for software companies to adapt to new paradigms, in addition to the timeline over which any disruption might occur."3
Salesforce is expected to report $11.05 billion in revenue, up 12% year-over-year, along with adjusted earnings of $3.11 per share, up from $2.58 the same time a year ago.
Analysts are largely bullish on Salesforce, with 14 of the 20 analysts with current ratings tracked by Visible Alpha calling the stock a "buy," compared to five neutral ratings and just one "sell" rating. Their average price target of $262 would imply close to 50% upside that would bring Salesforce shares nearly back to where they started the year.
This article has been updated since it was first published to reflect more recent prices and analyst estimates.
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