This quarter has seen a few jarring headlines for the Salesforce ecosystem. Layoffs, restructuring, customers vibe-coding their own CRMs, and the dreaded ‘SaaSpocalypse’ have all appeared in headlines since the CRM company posted its Q1 ‘27 results.
But it’s far from an entirely negative forecast for Salesforce, whose Q2 results are set to be released on August 26, after the close of the market. Let’s take a look at what to look out for.
What the Market Wants and Expects
Salesforce stock hit a new three-year low in June following a rough start to the year, with the company battling narratives of a ‘SaaSpocalypse’ – where AI is supposedly going to make traditional enterprise software obsolete (or at least, a lot less important).
The stock has managed to climb back since then, but is still valued much lower than it was at even the start of this year.
According to Investing.com, UBS is framing Salesforce as a “buy the rumor, fear the result” story, citing three driving factors behind the recovery since June’s lows.
The first is capital rotation, with investors shifting money out of AI-related companies and into more stable areas, like CRM.
The second is that AI displacement fears are overstated, with recent software results showing no convincing evidence that artificial intelligence is eating into enterprise software revenue.
Thirdly, a multi-model AI tailwind. There is an emerging narrative that a market full of AI model choices is actually to the benefit of application layer businesses, not just the builders of foundation models.
This is arguably good news, not just for Salesforce, but for the average admin, developer, architect and so on. If market signs are pointing towards CRM, particularly Salesforce, being a sturdier bet than younger, more “AI-native” companies, it might go some way to alleviating a fair amount of career anxiety some Salesforce professionals have been feeling recently.
Salesforce remains a global powerhouse, and people who have spent considerable portions of their lives learning and mastering the platform obviously don’t want the house to go up in flames. That scenario is certainly not going to happen overnight, but hopefully this provides some much-needed relief from the ‘SaaSpocalypse’ fatigue.
But the UBS conclusion is that, after the rally, the market will not tolerate any tempering of the narrative around acceleration in the second half of the year. The stock is priced with a comeback story in mind, and Salesforce needs to deliver results that validate those expectations. Mediocre results or guidance will not be good for Salesforce.
The consensus expects earnings per share (EPS) of $3.28 on revenue of $11.33B.
But there is a strong backdrop, with Salesforce beating EPS estimates four quarters in a row, including a very strong +23.96% boost ($3.88 vs $3.13 est) in the previous quarter. Even so, the stock still dropped slightly, showing that the market needs accelerating growth, not just a beat.
A Bullish or Bearish Case?
In its Q1 results, Salesforce issued second quarter revenue guidance of $11.27B to $11.35B – up 10% to 11% year-over-year (YoY) and 10% in CC. While this seems pretty impressive and consistent, it includes a “slightly above 4pts” contribution from Informatica, which the company acquired in late 2025 in an $8B deal.
Salesforce had ended Q1 with better results than many had expected, reporting $11.13B in revenue – up 13% year-over-year (YoY) – with Agentforce surpassing the $1B mark for the first time. That revenue also had an Informatica contribution to the tune of $444M.
So while those headline figures seem impressive, they are a little less so if we remove Informatica from the equation and focus just on organic growth.
It’s far from a bearish case overall, though. In Q1, Salesforce had leaned heavily into shareholder returns, including a $25B accelerated share repurchase program during the quarter, representing half of Salesforce’s $50B buyback program.
It also posted a non-GAAP operating margin of 34.8%, up 250 basis points YoY, alongside a GAAP operating margin of 21.1%, up 130 basis points. Operating cash flow reached $6.7B during the quarter.
There is some cause for optimism from the headlines, as well. ‘Missionforce’, Salesforce’s US Department of Defense-authorized platform, opens up a considerable government Total Addressable Market (TAM) for the company.
In July, Salesforce secured a $1.6B three-year deal with the US Department of Veterans Affairs, which will see the company’s ‘Missionforce’ project support VA care and service delivery. The deal aligns with Salesforce’s $5.6B US Army contract, which it secured at the beginning of the year.
Plus, as many as 24 analysts have revised earnings upward, and management has been buying back shares – which could be evidence of internal confidence, reports Investing.com.
Final Thoughts
Salesforce has plenty of reasons for optimism. Agentforce is getting traction, Missionforce is opening up a significant new market, and margins remain strong.
But the market seems to want a little more from Salesforce than just executing well. The year has been rough for CRM stock, and investors likely want evidence that the next phase of Salesforce’s growth story is actually picking up pace. Salesforce might have moved past the worst of the ‘SaaSpocalypse’ fears, but it still needs to turn AI into something that meaningfully drives a new era of growth.
