Salesforce’s Stock Gets a Downgrade Amid Concerns Over Misdirected AI Focus

Salesforce.com (NYSE: CRM) has come under scrutiny following a downgrade by DA Davidson, which shifted its rating from ‘Neutral’ to ‘Underperform.’ This change reflects apprehensions about Salesforce’s strategic pivot towards artificial intelligence (AI), which some analysts believe could detract from its core business operations.

The firm’s price target was reduced from $250 to $200, highlighting concerns over slowing growth in traditional services and the impact of recent acquisitions. Despite reporting significant revenue from AI and data products, doubts remain about the sustainability of this growth.

DA Davidson forecasts a revenue increase of 5.5% for fiscal 2026, falling short of the 7.5% consensus, suggesting potential risks to Salesforce’s financial health.

Analyst Downgrades Salesforce’s Stock Citing Focus Shifting Away from Core Operations

DA Davidson’s recent downgrade of Salesforce highlights significant concerns regarding the company’s strategic direction. The shift towards AI, particularly through initiatives like Agentforce, is seen as potentially premature, with analysts worried it could overshadow Salesforce’s traditional strengths.

The company’s core business areas, which constitute the vast majority of its operations, are perceived to be at risk as resources and focus divert towards AI.

This strategic pivot has also raised questions about recent acquisitions, including Slack, Tableau, and Mulesoft, and their integration into the broader business model. Despite Salesforce reporting a $900 million annual revenue run-rate from AI and data products, much of this is attributed to bundled pricing strategies rather than organic demand growth.

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CRM Stock Brief

Salesforce’s stock performance has reflected the market’s reaction to these strategic concerns, with a notable decline in recent weeks. The stock opened at $240.43 on April 21, 2025, and dipped to a current price of $235.30 by mid-morning, marking a significant drop from its previous close of $247.26. This downward trend has been consistent since late March, when the stock was priced at $285.51.

Despite a 52-week high of $369.00, the stock’s current trajectory suggests investor apprehension. Key financial metrics, such as a trailing P/E ratio of 37.05 and a forward P/E ratio of 21.14, indicate market uncertainty about future earnings potential.

While the market cap stands at $226.12 billion, the recent price movement reflects the challenges Salesforce faces in balancing its AI ambitions with sustaining core business growth.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.