Image source: Getty Images
Salesforce (NYSE:CRM) stock’s up 9% over the past year. However, the pound’s also up around 9% versus the dollar over the period. And as Salesforce shares are listed in dollars on the US exchange, that means a £10,000 investment a year ago would be worth pretty much the same today.
Agentic AI leader
Salesforce is a leading global cloud software provider. It’s also uniquely positioned at the forefront of the agentic artificial intelligence (AI) revolution in enterprise technology.
In recent months, Salesforce’s leadership in agentic AI — systems that can autonomously execute complex workflows and enhance productivity — has become central to its growth narrative, as highlighted by management’s focus on building a unified enterprise AI platform that integrates data, applications, and automation.
And on 26 June, CEO Marc Benioff said that 30-50% of the company’s work was being undertaken by AI. In other words, it’s practicing what it preaches.
Valuation remains key
From a valuation perspective, Salesforce currently trades at a forward price-to-earnings (P/E) of 23.7 times for 2026. That’s only slightly above the information technology sector median of 23.4 times. And it’s significantly below its five-year average of 40.5 times — a 41% discount to its historical norm.
The forward price-to-earnings-to-growth (Non-GAAP) ratio stands at 1.36. That’s notably better than the sector average of 1.79 and well below the company’s own five-year average, indicating that Salesforce’s projected earnings growth’s being offered at a relative discount to its peers and its own history.
Other valuation metrics, such as EV-to-EBITDA (forward) at 15.6 times and EV-to-EBIT (forward) at 17.9 times, are also below Salesforce’s historical multiples, further supporting the view that the stock’s trading at attractive levels relative to its long-term averages.
Salesforce’s capital structure’s another point of strength. The firm has $17.4bn in cash against $12bn in total debt, the company maintains a net cash position, providing flexibility for continued investment in AI, strategic acquisitions, and shareholder returns.
Collectively, these figures are very encouraging. And personally I believe the company’s growth trajectory is under-appreciated by the market. Looking around the market, several companies that are expected to be winner in AI, like Palantir, trade with crazy valuations — 247 times forward earnings and 7.9 PEG.
It’s got all the hallmarks on the next big winner, without the valuation premium.
The bottom line
A key risk for Salesforce lies in execution. While I believe it will succeed, integrating AI’s a substantial investment and it’s going to face stiff competition. Microsoft is also listed among the potential winners in this agentic AI sector, but they’re a lot bigger and have a lot more cash at their disposal, as well as an even larger customer base.
However, I believe Salesforce offers long-term promise as a winner in this AI revolution. It’s one of my larger holdings, and it’s certainly worth considering.
