Salesforce, Inc. CRM has taken a sharp hit, sliding more than 15% over the past month. This drop significantly underperforms the broader Zacks Computer – Software industry, which fell 9% during the same period. Compared to key competitors like Microsoft Corporation MSFT, SAP SE SAP and Adobe Inc. ADBE, Salesforce’s slump appears even more pronounced.
One-Month Price Return Performance
Image Source: Zacks Investment Research
This steep decline raises the question: Should investors cut their losses and exit, or is it worth holding onto? While the near-term headwinds are real, the long-term growth story for Salesforce remains intact, making a strong case for holding the stock.
Why Did Salesforce Struggle?
Salesforce’s recent decline stems from a mix of broader market weakness and company-specific concerns. A widespread sell-off in tech stocks, triggered by fears of escalating trade tensions and slowing economic growth, has put pressure on the entire sector. Companies that have benefited most from the AI boom, like Salesforce, are now experiencing valuation corrections.
On the earnings front, Salesforce’s fourth-quarter fiscal 2025 results disappointed investors. Although revenues grew 7.5% year over year to $9.99 billion, it slightly missed the Zacks Consensus Estimate. More concerning was the company’s guidance, which forecasts that first-quarter and full-fiscal 2026 revenue growth is expected to slow further to just 6-8%. This marks a clear deceleration from the double-digit growth investors had grown accustomed to in previous years.
Salesforce Inc. Price, Consensus and EPS Surprise
Salesforce Inc. price-consensus-eps-surprise-chart | Salesforce Inc. Quote
Enterprise customers are tightening their IT budgets due to economic uncertainty, which has slowed Salesforce’s momentum. Analysts anticipate this cautious spending environment will persist, with revenue growth for fiscal 2026 and 2027 projected at 7.7% and 9.3%, respectively. While this is slower than its historical pace, Salesforce is far from a declining business — its leadership position in enterprise software remains unchallenged.
Salesforce’s Market Dominance is Still Firm
Despite near-term growth concerns, Salesforce remains the undisputed leader in the customer relationship management space. The company continues to outpace competitors such as Microsoft, Oracle and SAP, holding the largest market share according to Gartner’s rankings. This dominance isn’t fading anytime soon.
Salesforce has built an extensive ecosystem that integrates seamlessly across enterprise applications. Its acquisitions — such as Slack and, more recently, the Own Company — demonstrate a long-term strategy of expanding its footprint beyond customer relationship management solution space into enterprise collaboration, data security and artificial intelligence (AI)-driven automation.
AI is a key part of Salesforce’s growth engine. Since launching Einstein GPT in 2023, the company has embedded AI capabilities across its entire platform, allowing customers to automate workflows, enhance decision-making and improve customer interactions. As AI adoption accelerates across industries, Salesforce is positioned to capitalize on this trend.
Another long-term tailwind is rising global IT spending. Gartner estimates worldwide IT spending will hit $5.61 trillion in 2025, a 9.8% year-over-year increase. Enterprise software, a key segment for Salesforce, is expected to grow even faster, with a projected 14.2% increase. Even if economic conditions slow spending in the short term, digital transformation remains a top priority for businesses, ensuring steady demand for Salesforce’s solutions.
Salesforce Valuation Supports a Hold Strategy
One of the silver linings of the recent sell-off is that Salesforce’s valuation has become more reasonable. The stock currently trades at a forward P/E of 24.21, below the industry average of 27.71. While not necessarily cheap, this valuation suggests that much of the near-term pessimism is already priced in.
Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Given Salesforce’s dominant position in enterprise software, ongoing AI initiatives and strong long-term growth potential, the recent pullback does not justify an exit. While the company faces short-term headwinds, its fundamentals remain intact, making it a stock worth holding.
Conclusion: Hold Salesforce Stock for Now
Salesforce’s recent struggles stem from a broader market correction and concerns about slowing growth. However, the company remains a dominant force in the customer relationship management space, is deeply embedded in enterprise IT budgets, and is leveraging AI for future expansion.
Its valuation has also become more attractive relative to historical levels. While near-term growth may be slower, Salesforce’s long-term investment case remains strong. For investors with a long-term view, holding the stock is the right move. CRM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).