Salesforce (CRM) shares have tumbled more than 50% from their December 2024 high, with the company's market capitalization shrinking from over $347 billion to roughly $136 billion. The selloff reflects mounting investor anxiety over the company's growth trajectory and the broader threat posed by AI-driven disruption in the software industry.
SaaSpocalypse fears intensify
The term "SaaSpocalypse" has gained traction as a shorthand for concerns that AI agents could render traditional software-as-a-service models obsolete, particularly the per-seat pricing structure. A notable example is Starbucks, which, according to Bloomberg, is building its own AI-assisted replacement for a Microsoft inventory system and an IBM maintenance solution, aiming to save the $400 million it spends annually on software.
These fears escalated after IBM reported a slowdown in its business, citing customers redirecting capital expenditure toward hardware such as servers and memory, away from software. This shift underscores a broader trend that could pressure Salesforce and its peers.
Organic growth slows, acquisitions mask weakness
Salesforce's organic growth has been decelerating. In its most recent quarter, revenue rose 13% to $11.1 billion, but that figure included $444 million from Informatica, acquired in an $8 billion deal. The company has been one of the most acquisitive in the U.S., spending billions on firms like Own Company, Fin, Bluebirds, Tableau, and Slack.
Analysts expect revenue to have grown 10% in the last quarter to $11.32 billion, with full-year 2025 revenue projected at $46.1 billion and $50.4 billion in 2026. However, the reliance on acquisitions for growth raises questions about underlying momentum.
Valuation: bargain or value trap?
On the surface, Salesforce appears cheap. Its non-GAAP forward P/E ratio has dropped to 11.8, well below the sector median of 24 and its own five-year average of 24. The forward PEG ratio stands at 0.73, also low relative to tech peers. However, these metrics are inflated by earnings from the Informatica acquisition, masking the core business's challenges.
For sustained growth, Salesforce will need new catalysts. Its Agentforce and data segments reported annual recurring revenue of $3.4 billion, a 200% jump, and the company has deployed over 3.8 billion Agentic Work Units across Agentforce and Slack. Yet, adoption of Agentforce AI has been slow, as noted in a recent KeyBanc downgrade.
Technical outlook
From a technical perspective, CRM stock remains under pressure. The weekly chart shows the price has fallen from a record high of $367 to a low of $146, and it continues to trade below the 50-week exponential moving average and the Supertrend indicator. The stock is also below the 78.6% Fibonacci retracement level.
In the near term, the stock could test its year-to-date low of $146. However, some analysts believe the long-term outlook may improve as investors eventually buy the dip in software stocks.
For context, the broader SaaSpocalypse narrative has also hit other companies, such as Figma, whose stock plunged amid similar fears. Meanwhile, Salesforce's recent 2.5% drop following a KeyBanc downgrade highlights the market's skepticism about Agentforce adoption.
This article is for informational purposes only and does not constitute financial advice.
