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Guggenheim Upgrades Salesforce to Neutral Amid Stock Decline

Salesforce

Business Honor
23 April, 2025

Guggenheim upgrades Salesforce to Neutral, citing improved valuation and concerns over Agentforce's potential.

Guggenheim has upgraded Salesforce from Sell to Neutral after a 26% decline in the stock price since January. This revision brings the share price more in line with the brokerage's earlier target of $247. The company eliminated its price target, indicating that Salesforce's present valuation now more accurately represents the company's potential in the future.

In January, Guggenheim had lowered its rating on Salesforce due to worries about the company's potential to successfully monetize its generative AI platform, Agentforce. The company had also been doubtful about the company's fiscal year 2026 (FY26) revenue guidance, which it felt would fall below market consensus.

Guggenheim analyst John DiFucci pointed out that investors had been too optimistic on Salesforce's position as a market leader in generative AI, citing the company's 42% jump after the launch of Agentforce. The platform launch had greatly beaten the overall software sector, raising investor expectations.

But Salesforce's FY26 revenue guide has subsequently been cut, and the firm has experienced leadership changes, including the exit of its Chief Operating Officer (COO). These are contributing to market uncertainty. But DiFucci emphasized that beneficial foreign exchange (FX) translation effects are assisting in mitigating some of the risks around the company's revenue guide.

Even with the upgrade, Guggenheim analysts are still skeptical about Agentforce's prospects. They caution that uptake of the platform can be constrained by macroeconomic issues and the saturated AI space. Moreover, Salesforce's history of innovation has come under questioning, as AI is likely to become a ubiquitous component in SaaS applications, which will make it harder for the company to effectively monetize its products.

Lastly, the analysts doubted the long-term appeal of Salesforce's valuation, citing its relatively high enterprise value against its growth potential.