Shares of software giant Salesforce (CRM 0.98%) are trading near a 52-week low as of this writing, down about 37% year to date — a slide that makes it one of the worst-performing large-cap software stocks of 2026. The latest leg lower came Thursday, with much of the software sector falling after Oracle reported its quarterly results.
Yet Salesforce's artificial intelligence (AI) business is growing faster than almost anything the company has ever sold. Annual recurring revenue (ARR) for Agentforce, the company's platform for putting autonomous AI agents to work, reached $1.2 billion in the fiscal first quarter of 2027 (the period ended April 30, 2026), up 205% year over year.
So investors are looking at a company whose newest product is more than tripling — and pricing the stock as if its best days are behind it. Both of these things can't stay true forever.
Here's a closer look at each side of this disconnect, and what could eventually resolve it.
Image source: Getty Images.
The bear case starts with a thesis that has earned its own nickname: the "SaaSpocalypse." The worry is that increasingly capable AI agents will take over work currently done by humans, shrinking demand for the per-seat subscriptions that software-as-a-service (SaaS) companies sell. And since Salesforce charges largely by the user, the thinking goes, fewer human users could eventually mean less revenue.
Oracle's report this week added to the pressure. While the database giant grew its fiscal fourth-quarter revenue 21%, its free cash flow for the full fiscal year was negative $23.7 billion as it ramps spending on AI data centers. Oracle shares sank about 10% on Thursday, and Salesforce fell alongside the rest of the sector.
And to be fair, the skeptics have some ammunition. Salesforce's fiscal Q1 revenue rose 13% year over year to $11.1 billion, but $444 million of that came from Informatica, the data management company Salesforce acquired last year. Excluding this contribution, growth was closer to 9%. Management also flagged ongoing weakness in its marketing and commerce products, along with softness in Tableau.
But here's the weird thing: despite some slowing in Salesforce's business, AI doesn't seem to be the issue. In fact, AI seems to be a catalyst.
Start with Agentforce. Its ARR stood at $800 million when fiscal 2026 ended on Jan. 31 — meaning the business grew 50% in a single quarter on its way to $1.2 billion. Even more striking, in a direct challenge to the idea that AI shrinks software seat counts, seven of Salesforce's 10 largest deals in fiscal Q1 added seats.
"[T]here is a latent demand where people want to use Salesforce in their flow of work, but they need a trusted infrastructure," said Salesforce president and chief engineering and success officer Srinivas Tallapragada during the company's fiscal first-quarter earnings call.
Management's position, in other words, is that AI is a tailwind for Salesforce rather than a threat.
CEO Marc Benioff called agentic AI "the biggest growth opportunity for our customers, and for Salesforce" in the company's fiscal Q1 earnings release. And the company is putting money behind the message, entering into a $25 billion accelerated share repurchase earlier this year. Partly thanks to the resulting drop in share count, fiscal Q1 earnings per share jumped 52% year over year to $2.42.
Of course, there's a caveat worth keeping front and center: Agentforce is still small. Against Salesforce's full-year revenue guidance of about $46 billion, $1.2 billion of ARR amounts to less than 3% of the total. A 205% growth rate, however impressive, can't really move the needle yet.
Ultimately, I think we'll get some clarity about whether AI is a catalyst or a deterrent to the overall business in the coming quarters. Management has said it expects organic revenue growth to reaccelerate in the second half of fiscal 2027. If that reacceleration arrives and seat counts keep growing, there's good reason to give the disruption thesis less weight. But if organic growth remains suppressed, the market's skepticism may be justified.
In the meantime, the stock trades at a price-to-earnings ratio of about 19 — well below its historical norm. To me, that suggests the market has largely priced in the pessimistic outcome, leaving room for shares to move meaningfully higher if Salesforce delivers on its forecast.
Of course, there's no guarantee management is right, and the stock could remain volatile while the debate plays out. But with Agentforce compounding this quickly and seats still expanding, the burden of proof may now sit with the bears. After all, if AI really were the end of Salesforce, would the company's AI products be its fastest-growing ever?
Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle and Salesforce. The Motley Fool has a disclosure policy.
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Investors seem convinced artificial intelligence will disrupt the software giant. Its most recent results tell a different story.
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