Salesforce Surges 38% YTD as $10.24B Quarter, 33% Margins, and AI Push Lift Wall Street Targets

Salesforce: AI Transformation, $10.24B Quarter, and $7B Buyback Reinforce Market Confidence Amid Cloud Reacceleration

Salesforce Inc. (NYSE:CRM) has reasserted its leadership in enterprise software with a quarter that underscored the company’s rapid evolution into an AI-driven cloud powerhouse. Amid a challenging enterprise IT environment, Salesforce delivered robust revenue growth, record profitability, and decisive capital allocation — signaling that its long-term growth story remains fully intact.

The company reported fiscal Q2 revenue of $10.24 billion, up 11% year-over-year, slightly beating Wall Street expectations of $10.12 billion. Net income came in at $2.21 billion, compared to $1.62 billion in the same period last year, representing a 36% jump. Adjusted earnings per share stood at $2.91, topping estimates by nearly 7%. Operating margin reached a record 33.1%, up from 31.6% a year earlier, reflecting Salesforce’s ongoing cost optimization initiatives and disciplined execution.

CEO Marc Benioff described the quarter as “a defining moment in Salesforce’s transformation,” emphasizing that the company’s integration of AI across every product line is reshaping its value proposition. “AI isn’t an add-on for Salesforce — it’s the core of how our customers operate, sell, and serve,” he said during the earnings call.

AI-related revenue, including products from Einstein GPT, Data Cloud, and Tableau AI, surged 42% year-over-year, with customer adoption up over 50% quarter-on-quarter. The Data Cloud platform, which unifies enterprise data for AI applications, is now used by more than 1,400 clients, including Coca-Cola, Ford, and Unilever, marking it as Salesforce’s fastest-growing product.

The company’s recurring revenue base continues to expand, with subscription and support revenue accounting for 93% of total sales. Deferred revenue grew 9% to $15.3 billion, highlighting strong renewals and multi-year contracts across large enterprise accounts. Salesforce’s remaining performance obligations (RPO) reached $54.2 billion, up 10% year-over-year, providing clear visibility into future revenue streams.

Salesforce’s efficiency push is delivering tangible results. Free cash flow rose 31% to $3.4 billion, while operating cash flow hit $4.2 billion. The company’s free cash flow margin of 33% now ranks among the highest in large-cap software. Total cash and equivalents stood at $15.6 billion, giving the company flexibility to pursue both innovation and shareholder returns.

In a move welcomed by investors, Salesforce announced a $7 billion share repurchase program, following through on its commitment to return capital while maintaining long-term investment discipline. The company has repurchased nearly $16 billion in shares since 2023, underscoring a maturing approach to capital efficiency.

Benioff reaffirmed Salesforce’s ambitious 2030 revenue target of $60 billion, implying a 9–10% compound annual growth rate (CAGR) over the next five years. The company expects to achieve this through the continued scaling of its AI-driven Data Cloud, expansion of Einstein Copilot and AI Trust Layer, and integration of generative AI capabilities across Sales, Service, Marketing, and Slack. Management highlighted that over 65% of Fortune 500 companies now use three or more Salesforce Clouds, illustrating strong cross-platform adoption and customer stickiness.

Wall Street analysts responded with optimism. Goldman Sachs raised its price target from $310 to $335, citing “durable revenue visibility and margin expansion.” Morgan Stanley lifted its forecast to $340, maintaining an Overweight rating and noting that “Salesforce’s AI monetization is still in its early innings.” Barclays reiterated Overweight with a $325 target, while Jefferies praised Salesforce’s balance of growth and profitability, saying it offers “one of the best risk-adjusted returns in enterprise software.”

The stock has gained 38% year-to-date, recently trading near $294.20, bringing Salesforce’s market capitalization to over $285 billion. Since its 2022 trough near $130, CRM shares have rallied more than 125%, fueled by record margins and a return to double-digit growth. Despite the rally, valuation remains moderate with a forward P/E of 26.7, below ServiceNow (31x) and Adobe (29x), implying potential upside if execution continues.

Technically, CRM stock maintains a strong uptrend, supported by the 50-day moving average at $278 and the 200-day average near $256. A breakout above $300 could pave the way to $320–$330, while short-term support lies around $280. The RSI of 63 suggests healthy momentum without overextension, supported by increasing institutional inflows following earnings.

Financially, Salesforce’s transformation since 2023 has been profound. After a wave of layoffs and restructuring, the company has emerged leaner, more profitable, and strategically aligned with AI-led enterprise spending. Operating expenses as a share of revenue have fallen from 72% to 64%, while R&D efficiency has improved by 8 percentage points. This margin discipline, paired with accelerating AI adoption, has restored investor confidence in the long-term model.

Challenges remain, particularly from Microsoft’s Dynamics 365 and Oracle’s Fusion Cloud, both of which are leveraging large language models to compete in enterprise automation. Yet Salesforce’s advantage lies in its ecosystem depth, brand trust, and integration capabilities — positioning it as the preferred AI layer for corporate CRM data.

As Salesforce eyes the next phase of its growth story, it is no longer just a SaaS company — it has become a critical enabler of enterprise intelligence. With revenue momentum, a $7 billion buyback, and expanding AI monetization, Salesforce’s narrative has shifted decisively from recovery to leadership.

At $294.20 per share, the market is once again pricing Salesforce not as a legacy software vendor, but as the infrastructure behind modern enterprise transformation — where every customer decision is powered by AI.

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