Is Salesforce Stock A Buy After Recent Decline?

Let us walk you through why we believe Salesforce stock remains attractive despite its recent 10% decline, even as the broader market questions the monetization of AI across the enterprise software sector.

Yes, and it’s worth acknowledging the challenging backdrop. Salesforce dropped 20% in 2025 while the S&P 500 gained 16%—a significant underperformance driven by slower-than-expected revenue growth and investor concerns about AI monetization. The start of 2026 hasn’t brought relief either, with the stock down another 10% year-to-date, caught in a broader enterprise software sell-off driven by deepening concerns about the pace of AI returns and intensifying competition.

But here’s where it gets interesting. When we compare Salesforce’s current valuation against its actual operating performance and financial health, the numbers tell a compelling story. Let us break this down across four dimensions: growth, profitability, financial stability, and downturn resilience. But before we dive into the details, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – Is Nebius Stock Still A Buy After Its Recent Gains?

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First question: Is Salesforce expensive?

On the surface, yes. The stock trades at a premium to the S&P 500 on multiple metrics:

• Price-to-sales ratio of 5.7x versus 3.3x for the index
• Price-to-earnings of 31.7x versus 24.1x
• Price-to-free cash flow of 17.7x versus 21.5x (though notably cheaper here)

Look at Salesforce’s Valuation Ratios dashboard for more details. But before you dismiss it as overpriced, consider what you’re paying for.

What kind of growth are we actually getting?

Salesforce’s revenue trajectory is solid, if not spectacular:

• Three-year average growth of 10% annually, outpacing the S&P 500’s 5.6%
• Last twelve months: revenues climbed 8.4% from $37 billion to $40 billion (versus 6.4% for the index)
• Most recent quarter: 8.6% growth to $10 billion (versus 7.3% for the S&P)

This is moderate growth—not the explosive expansion you’d see from a startup, but consistent and above-market performance from a $40 billion revenue company.

But can they actually make money on this revenue?

Here’s where Salesforce really shines. The profitability metrics are exceptional:

• Operating margin of 22% versus 18.8% for the S&P 500
• Operating cash flow margin of 33.5%—that’s remarkably high compared to the index’s 20.5%
• Net income margin of 17.9% versus 13.1% for the benchmark

Translation? Salesforce isn’t just growing revenues; it’s converting them into cash and profits at rates that exceed most companies in our coverage universe.

What about the balance sheet—can they weather storms?

The financial stability picture is very strong:

• Debt-to-equity ratio of just 4.9%, far below the S&P 500’s 19.9%. Lower is better here, and Salesforce’s leverage is minimal.
• Cash represents 11.9% of total assets versus 7.2% for the index
• With $11 billion in both debt and cash, the company essentially has a neutral net debt position against a $229 billion market cap

This isn’t a company stretched thin or dependent on favorable credit conditions.

How does CRM handle market crashes?

This is where we need some honesty—the downturn resilience is moderate, not exceptional:

• 2008 Financial Crisis: Fell 70.5% (versus 56.8% for S&P), but recovered to pre-crisis levels by December 2009
• 2020 Covid Crash: Dropped 35.7% (versus 33.9% for S&P), recovered by July 2020
• 2022 Inflation Shock: Declined 58.6% from its November 2021 peak (versus 25.4% for S&P), taking until March 2024 to fully recover

The pattern is clear: Salesforce tends to fall harder than the market in downturns but has historically recovered. Still, that 2022 experience—losing nearly 60% of its value—is sobering. Look at – Would You Still Hold Salesforce Stock If It Fell Another 30%? – for more details.

So, putting it all together, is this actually a buy?

Here’s our thinking. Yes, Salesforce trades at a premium to the market. But when you compare today’s 5.7x price-to-sales ratio to its own five-year average of 8x, the stock actually looks cheap relative to its historical norm. The average analyst price target sits at $329, implying 37% upside from current levels.

The company delivers moderate growth with strong profitability and very strong financial stability. The valuation premium exists for a reason—this is a high-quality business generating impressive margins and cash flows.

What’s the catch?

Let’s be clear about the risks. If investors remain convinced that Salesforce can’t effectively monetize its AI investments, the premium valuation could compress further. The stock’s history shows it can be volatile in downturns, particularly during prolonged sell-offs like 2022’s inflation shock. We could be wrong.

Also, remember, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

The bottom line?

For risk-taking investors with a long-term horizon, we believe the current pullback presents a buying opportunity. You’re getting a financially robust company with proven profitability at a valuation that’s reasonable relative to its own history, even if elevated versus the broader market. The AI monetization concerns that are weighing on the stock today could resolve favorably over time, and the company’s strong fundamentals provide a solid foundation for patient capital.

At $240, we think CRM stock remains attractive for those willing to look past near-term uncertainty and focus on the underlying business quality.

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