Salesforce stock has fallen about 10% this year, making it the worst performer in the Dow Jones Industrial Average. The drop comes as investor concerns grow over the impact of AI tools like ChatGPT on software companies.
The stock declined 24% in 2025, while Microsoft shares rose 14% and the Nasdaq Composite gained 36% during the same period.
JP Morgan analyst Mark Murphy recently told clients that Salesforce is in a complex transition period lasting 12 to 18 months. He noted internal operations appear to be stabilizing but warned this may not lead to clear improvements in key financial metrics like revenue. Murphy said the stock likely won't recover until the second half of the year.
Salesforce has taken steps to address market worries. At last September's Dreamforce event, the company showcased its AI product Agentforce, demonstrating how it helps companies including PepsiCo and Dell. In December, Salesforce increased its revenue and adjusted profit forecasts for fiscal 2026.
Agentforce's annual recurring revenue exceeded $500 million in the third fiscal quarter, growing more than four times from a year earlier.
CEO Marc Benioff spent parts of 2025 building closer connections with President Trump. Benioff attended a state dinner hosted by King Charles for Trump in September alongside other executives.
Just before Dreamforce, Benioff suggested to the New York Times that National Guard troops should be deployed to San Francisco. Many viewed these remarks as support for Trump, though Benioff later partially retracted them after criticism from other executives.
Starboard Value CEO Jeff Smith commented on Salesforce at Yahoo Finance Invest. "Salesforce is a great, terrific terrific company," Smith said. "I think they're going to be an AI beneficiary. They are still focused on their profit margins."
Starboard was among the first investors to publicly urge Salesforce to change its business approach three years ago, particularly asking Benioff to reduce expensive acquisitions that hurt margins. Salesforce initially cut back on deals but returned to acquisitions in May 2025 with an $8 billion purchase of Informatica. Since announcing that deal on May 27, 2025, Salesforce stock has dropped 13%.
Smith added, "The performance has been much better from the beginning of our engagement to now. The multiple has come down. So it's not an execution issue." He noted software companies generally face pressure, especially those not growing at 20% rates. "They're [Salesforce] growing double digits. But it's not as high as other people would want. So we feel really great about it and think it's a terrific position for us. And the company is going to do well."
According to regulatory filings, Starboard maintains a small position in Salesforce.
Investors remain cautious about buying the stock even at reduced prices until Salesforce proves it can generate significant profits from Agentforce and meet its long-term targets. The company also faces calls for stricter cost management.
Market sentiment questions the future of traditional software firms as AI advances. This pressure affects not only Salesforce but also companies like Adobe.