Salesforce Aug 19

Rating Company Date 19 August 2026 Buy Salesforce North America Reuters Bloomberg Rating Buy CRM.N CRM US Price target (USD) 255.00 United States Price at 18 Aug -week range 266.23 – .55 TMT Software Valuation & Risks

F2Q Insights - Eyeing Acceleration Brad Zelnick We expect Salesforce to report a mostly in-line F2Q, with potential for modest Research Analyst upside to guidance, though we do not expect results to meaningfully settle the broader debates around the company’s organic growth reacceleration or AI Bhavin Shah, CFA positioning. Our partner conversations suggest the quarter was fine, but not Research Analyst without friction, as deal cycles elongated further with customers increasingly thinking through broader agentic transformation roadmaps rather than simply Chris Fountain upgrading or renewing. Importantly, we do not view this as entirely Salesforce- Research Associate specific, as enterprises are still in the early phases of working through AI governance, data readiness, and determining ROI thresholds. That said, checks suggest this transition is weighing on the pace and shape of demand, with fewer Nick Giovacchini Research Associate traditional Sales and Service Cloud expansions and smaller upfront data-oriented deals initially. As a result, we think the quarter is unlikely to drive meaningful estimate revisions, which we believe would be required to materially sway sentiment and catalyze the stock. Investors will likely focus on whether management can provide greater confidence in the FY27 acceleration path, the trajectory of Agentforce monetization, and whether evolving pricing constructs such as AELAs, flex agreements, and outcome-based pricing can support adoption without creating additional confusion. While investors will also likely focus on recent leadership changes, we would view reports suggesting the elevation of an internal sales leader as a positive signal, reflecting confidence in the company's existing go-to-market execution. With shares trading at 11x Street EV/CY27E uFCF and 15x ex-SBC, we think valuation continues to screen favorably, and we maintain our Buy rating.

Our partner work suggests Salesforce is transitioning from traditional CRM app suite implementations toward broader Data 360, Agentforce, and holistic agentic architecture discussions. One partner noted that lead flow has shifted meaningfully toward agentic use cases, and that these deals are taking longer to close and generally start with smaller ACV given evaluation cycles and a heavier compute/data integration component. In several cases, "AI Centers of Excellence" are emerging as new stakeholders in the buying process, which may be positive for long-term standardization but is delaying near-term decision- making as customers assess governance and security implications, model strategy, and the full future cost of scaling consumption. This is consistent with feedback that AI is involved in every new deal discussion, but implementation readiness, and pricing clarity remain bottlenecks for customers to meaningfully expand. We also heard core license growth remains pressured, while more of the incremental budget is flowing toward Data 360. On a positive note, MuleSoft's new Agent Fabric product, a unified control plane that enables agent discovery,

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orchestration, governance, and monitoring across vendors, is generating high interest. We have also picked up strength in Informatica cloud migrations to IDMC.

Agentforce feedback continues to suggest adoption is early and uneven. We heard trial-to-paid conversion rates improving, but fewer than 10% of customers are in full production deployment and initial purchases are often limited to targeted use cases. Partners cited data quality, integration complexity…