Salesforce: Entering The Single Digit Club (Rating Downgrade)


  • Salesforce’s stock price dropped nearly 20% after mixed Q1 FY2025 results and weak revenue guidance.
  • The company’s growth outlook has been muted, projecting single-digit revenue growth for the first time in history for both Q2 and FY2025.
  • The significant slowdown in bookings and backlogs growth indicates sluggish demand, despite the presence of Generation AI tailwinds.
  • The potential acquisition of Informatica adds uncertainty to the stock’s near-term performance.
  • Despite margin expansion and the capital return program, the post-selloff justifies the current valuation only if the AI-related products have not materially boosted revenue outlook to double digits.

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J Studios

Investment Thesis

Salesforce (NYSE:CRM)’s price crashed by almost 20% after earnings due to mixed Q1 FY2025 results and disappointing forward guidance. Although the management is optimistic about long-term growth opportunities related to AI products, the company’s growth outlook

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