In the age of artificial intelligence, companies aren’t completely abandoning Salesforce, but the way they use it and what they expect from it is changing. For Morgan DeBaun, CEO and co-founder of digital media group Blavity, the cost savings enabled by AI are a big factor in how he sees Salesforce going forward. Blavity, which aims to serve Black audiences, spends about $1 million a year on enterprise software from about a dozen vendors, including Salesforce. When the current six-figure contract expires in early 2027, DeBaun plans to replace Salesforce’s customer relationship management (CRM) platform with a more cost-effective AI solution. He said the move would result in savings of at least 50% to 60%. DeBaun told CNBC that he has no plans to completely sever ties with Salesforce. She wants to keep Slack, which Salesforce acquired in 2021 for about $28 billion. Rebuilding a workplace messaging platform in-house is too expensive and complex, even with AI. Just last week, Salesforce announced new AI capabilities for Slack following January’s big agent update. But DeBaun doesn’t want to pay more to Salesforce or other enterprise software vendors for AI capabilities. “We would like to see AI capabilities included in basic services,” she explained. “What they’re doing is trying to overcharge us for the use of AI features that are supposed to be unique to their products,” he said, adding that rising prices for AI have not translated into increased efficiency. The shift reflects a broader debate on Wall Street over whether applications built using AI coding assistants from startups like Anthropic and OpenAI will disrupt traditional enterprise software companies like Salesforce. Fears of AI disruption sent software stocks crashing this year as investors took a sell first, ask questions later approach. While AI tools make it easier for companies to build custom CRM and data management systems, many companies like Blavity still rely on Salesforce’s extensive product ecosystem. Taken together, this suggests that new AI tools have the potential to reshape enterprise software businesses, rather than eliminate them. The idea that software and software-as-a-service can be ignored in the age of AI is complete nonsense. Salesforce CEO Marc Benioff Salesforce co-founder and outspoken CEO Marc Benioff has long maintained that AI is a benefit to his business, not a threat. “This idea that software and software-as-a-service can be ignored in the age of AI is utter nonsense,” Benioff told Jim Cramer on “Mad Money” last week. Benioff says the new paradigm is how AI and software work together to help businesses, citing Slack as an example. “Five years ago, we acquired Slack. Slack was a great company, but it’s become an even better product. And in those five years, we’ve tripled our revenue. We’re on track to generate about $3 billion in revenue from Slack this year.” The impact on enterprise software is two-fold. (1) AI tools like Salesforce’s Agentforce make companies more efficient, leading to fewer employees and fewer software license sales per employee. (2) AI tools allow companies to create their own software, eliminating or reducing the need for Salesforce. In making the case for Salesforce, Benioff pointed to the company’s better-than-expected fiscal 2026 fourth-quarter results, as well as its full-year 2027 revenue guidance of $45.8 billion, which it announced in February. He said these numbers show that AI is not having a negative impact on business. The company announced in February that Agentforce has closed more than 29,000 deals since its launch in September 2024 and now generates $800 million in annual recurring revenue. In his fourth quarter earnings call, Benioff cited Amazon, Ford, General Motors, AT&T, Moderna, and Pfizer as global brands that have chosen Salesforce to lead their agency transformations. In September, we spoke with a few small Agentforce early adopters who were excited about the product. But questions remain as to whether Agentforce’s sales will grow quickly enough to replace the stagnant traditional platform business. CRM Mountain 2022-04-01 Salesforce from April 2022 That perceived threat is hurting Salesforce stock, which is down nearly 15% in the last month and more than 35% year-to-date, currently trading at about $170 per share. Shares soared 4% after the earnings report in February, briefly peaked above $200 in March, but have since fallen again. Salesforce is taking advantage of the stock’s price, which is well below its all-time high of about $368, set in December 2024. The company launched a $25 billion accelerated share repurchase program, financed with debt, as part of a broader $50 billion share repurchase plan. That’s a huge stake for a company with a market capitalization of $162 billion. “These are some low prices,” Benioff said on an earnings call in February. Despite the bold moves and tough negotiations, Salesforce isn’t ignoring the risks. “As with any technological disruption, we have a healthy sense of paranoia about what’s going to happen,” Varmik Desai, vice president of investor relations at Salesforce, told CNBC. But Desai said companies that initially experimented with developing their own tools are coming back. “There’s a group of (chief information officers) that have taken a very forward-thinking approach and tried to do a lot of the work themselves. … A lot of those customers and CIOs in particular are the ones that are actually coming back to the table.” Despite the ups and downs, many analysts at major Wall Street firms remain bullish on Salesforce as it looks to adapt to an evolving landscape. After last week’s Slack event, Citizens reiterated its Buy rating and $315 price target on Salesforce stock. Slack’s built-in AI assistant is a one-stop shop that allows users to bypass traditional interfaces to capture data, approve workflows, and complete tasks. Pat Walravens, head of technology equity research at Citizens, told CNBC this is how Salesforce needs to “adapt to the world of AI.” Walravens says that while AI-powered tools are making it easier for companies to build their own tools, this approach is a more viable option for smaller or start-up companies. But for large enterprises where data governance and permissions are important, building these systems from scratch can be risky. “If you do it wrong, the consequences are huge,” Walravens said. As a result, Walravens believes large enterprises will continue to use existing vendors such as Salesforce and, increasingly, ServiceNow and Workday, which offer agent solutions. According to FactSet, Citizen is among 74% of research shops that rate the stock as a “buy” or “equivalent to buy,” while 24% rate it a hold and just 2% rate it a sell. In conclusion, Jeff Marks, Director of Portfolio Analysis at Jim and Club, addressed the tough situation in Salesforce stock and other enterprise software companies during Thursday morning’s meeting. “As we were getting off the elevator, we talked about how much we kept on Salesforce to stay in touch,” Jim told Jeff. He then asked rhetorically, “How much do you really want to lose with Salesforce?” Jeff said software stocks are certainly troubling. They are still figuring out what to do next. But right now, Salesforce is less than 1% of our portfolio and our most important position. The club is in hold camp. Jim has repeatedly said that investor concerns about SaaS are overblown. But Jim, a longtime Benioff fan, believes Salesforce needs to find a way to change the narrative that has blanketed the market. (Jim Cramer’s Charitable Trust is a long CRM. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll receive trade alerts from Jim Cramer before he makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
