The Street is Finally Going Bullish on Salesforce and I Keep Buying
Wall Street spent all year convinced AI would hollow out Salesforce's business model, and every time the stock dipped, one investor kept adding to the position anyway. Here is why the cash flow and buyback math convinced him the crowd…
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I keep buying Salesforce (NYSE:CRM | CRM Price Prediction) because the market spent most of this year arguing about whether AI would kill it, and management kept quietly stacking evidence that AI is doing the opposite. Every dip this year, I added. Now the sell-side is finally catching up, and I am still not done.
Why My Money Keeps Landing Here
The pull is simple. Salesforce owns the system of record where the enterprise actually lives, and the AI layer everyone was afraid would replace it is instead pouring recurring revenue back into it. Agentforce ARR hit $1.5 billion, and combined Agentforce and Data 360 ARR reached nearly $3.90 billion, up over 210% year-over-year. Marc Benioff put it flatly on the Q2 call: “AI isn’t replacing Salesforce. It’s unlocking more value across all four layers of our platform.” That is the thesis in one sentence, and the customer proof points back it. Xero rolled Agentforce to 100% of customers with a 62% deflection rate across more than 200,000 interactions. Uber for Business pointed Agentforce at its lead pile and saw 60% more leads converting within two weeks.
Three Receipts I Keep Rereading
First, the cash machine. FY26 free cash flow was $14.402 billion, up 15.83% year-over-year, and Q2 free cash flow of $1.098 billion was up 81.49% year-over-year. Against that, free cash flow yield sits at 7.50% and price-to-free-cash-flow at 13.33. That is a rounding error of a multiple for a business growing subscription revenue 12% year-over-year with gross margins of 77.68%.
Second, the buyback is doing real work. Diluted share count fell to 821 million from 962 million a year ago thanks to a $25 billion ASR, with a new $50 billion repurchase authorization behind it. The quarterly dividend of $0.44 was raised 5.8% year-over-year. The yield is still modest, and it is growing on a shrinking share count.
Third, the visibility. Current RPO of $33.5 billion, up 14% year-over-year, is future revenue already signed. Management raised full-year FY27 revenue guidance to $46.1 billion to $46.4 billion and reaffirmed the FY30 target of $63 billion. Q2 also marked the sixth consecutive quarter of beating EPS expectations, with non-GAAP EPS of $5.90 versus $3.27 consensus.
Why Not the Obvious Alternative
The reflex AI trade in enterprise software is Microsoft (NASDAQ:MSFT), and I own it too. But CRM is where I keep adding, because CRM’s forward P/E of 14 and 7.50% free cash flow yield are simply not what Microsoft offers at its current valuation. I am paying a low-teens multiple for double-digit subscription growth and a $50 billion buyback. That math wins my next dollar.
Risk I Refuse to Wave Off
Balance-sheet leverage jumped. Total liabilities rose 96.56% year-over-year to fund the ASR, and shareholders’ equity declined 37.42%. That is real. What keeps me steady is interest coverage of 27.5x and net debt/EBITDA of 0.78. This company can service the debt with cash flow it prints in a single quarter.
Conviction From Here
The Street is warming up now, with an analyst target price of $281.89 against a current price of $233.28 and 40 buy or strong-buy ratings against just 2 strong sells. I was buying when shares were down 11.32% year-to-date. I will keep buying while the cash flow keeps compounding and the shares keep disappearing.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
