Salesforce won’t be discarded in the AI boom, but what companies want is changing
Companies are not going to abandon Salesforce altogether in the age of artificial intelligence, but they are changing how they use it and what they expect. For Morgan DeBaun, CEO and co-founder of digital media group Blavity, cost-saving enabled by AI is a major factor in how she views Salesforce going forward. Blavity, which aims to serve Black audiences, spends about $1 million per year on enterprise software across roughly a dozen vendors, including Salesforce. Once its current six-figure contract expires in early 2027, DeBaun plans to replace Salesforce’s customer relationship management (CRM) platform with a more cost-efficient AI solution. She said the move will result in savings of at least 50% to 60%. DeBaun told CNBC she does not plan to sever ties with Salesforce completely. She wants to hold onto Slack, which Salesforce bought for nearly $28 billion in 2021, because rebuilding a workplace messaging platform internally is too expensive and complex, even with AI. Just last week, Salesforce unveiled new AI features for Slack, following a big January agentic update . DeBaun, however, does not want to pay Salesforce or any other enterprise software vendor more money for AI features. “I would expect their AI features to be included in their base offering,” she explained. “What they’re all doing is trying to upcharge us to use the AI features, which should be endemic to their product naturally.” She added that higher prices for AI are not translating into better efficiency. The shift reflects the broader debate on Wall Street over whether applications built using AI coding assistants from newcomers like Anthropic and OpenAI will disrupt traditional enterprise software companies like Salesforce. AI disruption worries have crushed software stocks this year, as investors have adopted a sell-first, ask-questions-later approach. While AI tools do make it easier for companies to build custom CRM and data management systems, many businesses, like Blavity, still rely on Salesforce’s broader ecosystem of products. Taken together, it suggests new AI tools may reshape the enterprise software business, rather than eliminate it. This idea that software and software-as-a-service can be disregarded in the age of AI is quite nonsensical. Salesforce CEO Marc Benioff Marc Benioff, the outspoken CEO and co-founder of Salesforce, has long argued that AI is good for his business, not a threat. “This idea that software and software-as-a-service can be disregarded in the age of AI is quite nonsensical,” Benioff told Jim Cramer on “Mad Money” last week. According to Benioff, the new paradigm is how AI and software can work together to help companies, pointing to Slack as an example. “Five years ago, we bought Slack, and it was an incredible company, but it’s become an even better product. We’ve also tripled revenue during that five-year period … anticipating about $3 billion in revenue this year with Slack.” The knock on enterprise software is two-fold: (1) AI tools, such as Salesforce’s Agentforce, are going to make companies more efficient — leading to reduced headcount and fewer per-seat software license sales; and (2) AI tools are going to allow companies to make their own software, thus eliminating or reducing the need for Salesforce. In making his case for Salesforce, Benioff pointed to the full-year fiscal 2027 $45.8 billion revenue guidance that Salesforce issued in February, alongside better-than-expected fiscal 2026 fourth-quarter results . He said these numbers show that AI is not hurting its business. In February, the company said Agentforce closed more than 29,000 deals since its September 2024 launch and is now an $800 million annual recurring revenue business. On its Q4 earnings call, Benioff listed Amazon , Ford , General Motors , AT & T , Moderna , and Pfizer as global brands that have chosen Salesforce to lead their agentic transformation. Back in September , we spoke with a handful of smaller Agentforce early adopters, who were excited about the product. But the question remains whether Agentforce sales will ramp quickly enough to replace the stagnating legacy platform business. CRM mountain 2022-04-01 Salesforce since April 2022 It’s that perceived threat that has hammered Salesforce stock, which is down nearly 15% over the past month and more than 35% year to date, now trading at around $170 per share. The stock did see a post-earnings pop of 4% back in February and briefly traded above $200 in March before drifting lower again. With shares well-below their all-time closing high of nearly $368 back in December 2024, Salesforce is taking advantage of those prices. The company launched a debt-funded $25 billion accelerated share repurchase program as part of its broader $50 billion buyback plan. That’s a huge amount of stock for a company with a market capitalization of $162 billion. “These are some low prices,” Benioff noted on the February earnings call. Despite the bold moves and tough talk, Salesforce is not oblivious to the risk. “As with every technological disruption, we have a healthy paranoia of what could happen,” Valmik Desai, vice president of Salesforce investor relations, told CNBC. However, Desai said companies that initially experimented with building their own tools have returned. “There’s a group of [chief information officers] who took a really forward-thinking approach and tried to do a lot of this work themselves. … Many of those customers and CIOs specifically are the ones who are actually coming back to the table.” Despite the back and forth, many analysts at major Wall Street firms remain bullish on Salesforce as the company moves to adapt to the evolving landscape. Citizens reiterated its buy-equivalent rating on Salesforce stock along with a $315 price target after last week’s Slack event. The AI assistant embedded within Slack is a one-stop shop, allowing users to pull data, approve workflows, and complete tasks by bypassing traditional interfaces. This is how Salesforce needs to “adjust to the AI world,” Pat Walravens, head of technology equity research at Citizens, told CNBC. Walravens said that while AI-driven tools are making it easier for companies to build out their own tools, that approach is a more viable option for smaller or newer companies. But for larger enterprises, whose data governance and privileges are critical, building these systems from scratch can be risky. “If you get it wrong, the consequences are super high,” Walravens said. For that reason, Walravens believes that big enterprises will stick with incumbent vendors like Salesforce, as well as ServiceNow and Workday , which are increasingly providing agentic solutions. Citizens is among the 74% of research shops that have a buy or a buy-equivalent rating on the stock, with 24% at hold and just 2% at sell, according to FactSet. Bottom line Jim and Jeff Marks, director of portfolio analysis for the Club, addressed the tough situation with Salesforce stock and other enterprise software companies on Thursday’s Morning Meeting. “We talked going down the elevator about how much we kept Salesforce on the sheets to stay in touch,” Jim said to Jeff. He then asked rhetorically: “How much do you really want to lose in Salesforce?” Jeff said that software stocks are certainly troublesome. They are still considering what to do next. But for now, Salesforce is our smallest weighted position at under 1% of the portfolio. The Club is in the hold camp . Jim has repeatedly said that investor concerns about SaaS are overblown. However, Jim, who has been a fan of Benioff for years, thinks Salesforce needs to figure out a way to change the narrative that has overtaken the market. (Jim Cramer’s Charitable Trust is long CRM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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