Should You Buy Salesforce Stock For Its Cash?

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Shares of Salesforce (CRM) trade 38.5% below their December 4, 2024 high, making the company’s cash generation worth examining. Over the last twelve months, Salesforce generated free cash flow equal to 8.2% of its market value, compared with 4.2% for the median S&P 500 company. Cash priced this cheaply points to either a fundamentally sound business trading at a discount or a company that investors expect to shrink. So which of the two is Salesforce?

Salesforce Has Grown Its Free Cash Flow Every Year

Salesforce fits the profile of a sound business trading at a discount. Measured a year apart, the company has increased its free cash flow in each of the last three years, reaching $15.2 billion in the twelve months to July 31, 2026, up from $7.56 billion three years earlier.

This cash holds value for shareholders regardless of whether management pays it out, since an owner retains a claim on it just as they do on earnings. Cash kept inside the company still belongs to its investors. Over time, a share price often follows that cash, particularly when the cash is growing, though Salesforce shares have not done so yet.

The company sells subscription software, ranging from Agentforce Service and Agentforce Sales to Slack, and running this business requires minimal capital. Capital spending accounted for 3.8% of cash from operations over the last twelve months. Revenue over that period reached $43.9 billion, an 11.2% increase from a year earlier. The operating margin widened to 21.5%, up from 19.1% two years before.

The business must now service a larger debt load. Total debt stood at $41.7 billion on July 31, 2026, compared with $11.2 billion a year earlier. Over the same twelve months, Salesforce repurchased $35.1 billion of its own shares. Measured against enterprise value, which combines market value with debt net of cash, free cash flow equals 7.0%.

Why Do Investors Doubt Salesforce’s Subscription Business?

The current share price suggests AI will reduce corporate demand for Salesforce subscriptions. Management addressed this doubt during its August 26, 2026 call, noting that skeptics expected seat counts to decline and customers to leave. Executives strongly refuted concerns of a structural downturn in software demand.

Some results align with those concerns. Revenue in the Agentforce Marketing and Agentforce Commerce segment grew 2.8% in fiscal 2026, slowing from 7.5% the year before. During the call, management also said licensed revenue remained volatile.

The company’s cash forecast has also become more cautious. Management expects free cash flow to grow 4% to 5% in fiscal 2027. In May, it said debt issued for its $25 billion accelerated share repurchase took about 5 points off that growth. That represents a slower pace than in fiscal 2026, when free cash flow climbed to $14.4 billion from $12.4 billion. At that expected growth rate, fiscal 2027 free cash flow would fall slightly short of the $15.2 billion generated over the latest twelve months.

Management countered that customers are staying and adopting Salesforce’s newer AI products. Executives said attrition hovered near its lowest level ever, adding that annual recurring revenue from Agentforce reached $1.5 billion. At its September 16 investor day, Salesforce also set a fiscal 2030 revenue target of over $63 billion.

What Should Salesforce Holders Watch Next?

Salesforce is generating more cash, and its shares are priced low against it. The open question is whether that growth will persist and whether the company can manage its new debt load. On October 20, Salesforce also agreed to buy Braze for about $5.66 billion in cash, a deal expected to close in fiscal 2028. Net debt stood at $30.3 billion on July 31, 2026, which equals roughly two years of free cash flow at the latest twelve-month pace.

Investors should watch twelve-month free cash flow and net debt when Salesforce reports its fiscal third quarter, expected in December 2026.

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