Gotrade News - Salesforce rallied 4% on Thursday (02/26), making it the top performer on the Dow Jones even as the broader tech sector slipped. The pop came after the company dropped fourth-quarter fiscal 2026 results that beat analyst expectations, largely fueled by growing demand for its AI products.
Fourth-quarter revenue came in at $11.2 billion, up 12% year over year, while adjusted earnings per share surged 37% to $3.81. That EPS figure crushed the consensus estimate by $0.76 per share, according to The Motley Fool.
Key Takeaways
- Salesforce delivered strong profit growth driven by AI, but its full-year revenue guidance fell short of market hopes
- The $50 billion buyback sounds massive, yet there's no set timeline and the company isn't locked in to spend all of it
- Major analysts including Wedbush, Goldman Sachs, and Deutsche Bank all cut their price targets while still staying bullish long-term
For the full fiscal year 2026, Salesforce pulled in $41.5 billion in revenue, up 10%, with adjusted earnings climbing 23% to $12.52 per share. However, the fiscal 2027 revenue guidance only projects 10%-11% growth, and roughly three percentage points of that comes from the Informatica acquisition.
The company also laid out a target of $63 billion in revenue by fiscal 2030, which works out to a 4-year CAGR of 10%. That's steady but still lags behind other cloud heavyweights like Microsoft and Alphabet, as noted by The Motley Fool.
$50 Billion Buyback, a Vote of Confidence or Just Optics?
CEO Marc Benioff said the stock was trading at "low prices" and used that as the pitch for rolling out a fresh $50 billion buyback authorization. This new program replaces all previous ones and equals about 28% of the company's roughly $180 billion market cap.
Here's the catch though. The program has no set execution timeline, and Salesforce isn't obligated to spend the full amount. Over the past three years, the company bought back $28 billion worth of shares, but the actual share count only shrank by 4% because of hefty stock-based compensation that keeps diluting the pool.
At around $200 a share, Salesforce looks cheap on paper at 15 times this year's adjusted earnings. But with analysts projecting just 6% adjusted EPS growth in fiscal 2027, that valuation looks more fair than bargain-priced, according to The Motley Fool.
Analysts Stay Bullish, But Dial Back Their Targets
Wedbush called the recent software stock sell-off "overblown" and tagged Salesforce as a "long-term winner" of the AI boom. Still, the firm trimmed its price target from $375 to $325, according to Investopedia.
Goldman Sachs and Deutsche Bank followed a similar playbook, cutting their targets to $281 and $255 respectively while keeping their buy ratings intact. Both targets still point to meaningful upside from current levels.
Despite the earnings beat, Salesforce shares are still down roughly 25% since the start of the year and about 36% over the past 12 months. Slowing revenue growth and rising competition from newer generative AI platforms have been the main drags on the stock.
The bottom line is that Salesforce's AI bet is starting to pay off on the earnings front. But with growth cooling and a buyback that may never fully materialize, the market seems to want more proof before handing back a premium valuation.
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Reference:
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Investopedia, Salesforce Stock Climbs After Earnings. Wedbush Calls It 'Long-Term Winner' of the AI Boom. Accessed on February 27, 2026
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The Motley Fool, Salesforce Is Buying Back $50 Billion of Its Own Stock. Should You Be Buying Too?. Accessed on February 27, 2026
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