Salesforce (CRM) dropped 18% over the past quarter, closing at $198.50, its lowest level since early 2023, as cloud infrastructure costs and AI integration delays weighed on sentiment. Despite the decline, some investors are eyeing the stock as potentially undervalued.
- Salesforce (CRM) closed at $198.50, its lowest since early 2023, after an 18% quarterly decline
- Q4 2025 revenue: $8.3 billion (+7.3% YoY), but EPS of $1.52 missed estimates by $0.08
- Operating margin fell to 28% from 29.5% YoY, driven by 14% higher infrastructure costs
- Current P/E ratio: 22.8x, below five-year average of 36.4x, with target prices ranging from $260 to $285
- ETFs reduced CRM holdings by 2.1% in February, while hedge funds increased exposure
- AI integration delays and cloud costs remain key downside risks for Q1 2026
Salesforce (CRM) has fallen to a 52-week low of $198.50, down 18% from its peak in late 2025, as concerns mount over rising data center expenses and slower-than-expected rollout of its Einstein AI platform. The stock’s recent underperformance has outpaced broader tech sector declines, with the Nasdaq-100 registering a 6.2% gain over the same period. Market watchers now assess whether the sell-off reflects temporary headwinds or a structural shift in enterprise software demand. The company reported Q4 2025 revenue of $8.3 billion, a 7.3% year-over-year increase, but adjusted EPS of $1.52 missed analyst expectations by $0.08. This miss, coupled with a 14% rise in infrastructure costs—driven by AI compute demands—undermined confidence. Despite maintaining a 28% operating margin, the margin contraction year-over-year raised red flags among institutional investors. Analysts at three major brokerages have issued buy ratings on CRM with target prices ranging from $260 to $285, citing the stock’s current price-to-earnings ratio of 22.8x, well below its five-year average of 36.4x. The implied upside of 30% to 44% hinges on improved AI monetization and cost optimization, particularly in the upcoming Q1 2026 earnings cycle. Apple (AAPL) and oil futures (CL=F) have seen stronger momentum, but CRM’s valuation gap suggests it may be oversold relative to its long-term growth trajectory. Investors in the software sector, particularly those focused on enterprise SaaS, are closely monitoring CRM’s next earnings report. The stock’s performance has also drawn attention from passive funds, with ETFs tracking the S&P 500 shedding 2.1% of their CRM holdings in February, according to independent data. However, a growing number of hedge funds have increased positions, signaling potential institutional confidence in a rebound.