Salesforce has a $5 billion stake in one of the hottest companies in artificial intelligence (AI). Investors aren’t impressed.
On 1 June, Bloomberg reported that Salesforce’s investment in is now worth about $5 billion, reflecting the AI startup’s soaring valuation. Salesforce shares initially rose on the news but have since fallen about 5%. The reaction suggests investors are looking beyond paper gains from AI bets and focusing instead on whether the software giant can turn AI into sustainable revenue growth.
Salesforce has spent the past few years investing heavily in AI, embedding the technology across its core products and launching new offerings. Its strategy is closely watched because it is the world’s largest pure-play SaaS company by market capitalization and has a significant presence in markets including India.
Disruption fears
Salesforce shares have fallen more than 28% since the start of the year. Its peers have also suffered sharp declines, ranging from 21% for ServiceNow to 54% for Intuit, even as the Nasdaq-100 has gained nearly 21% over the same period.
Investors fear could disrupt the SaaS business model. The sector has long relied on per-seat pricing, a structure that supported rich valuations because revenues were predictable. Now, enterprise customers may automate tasks through AI agents, reduce headcount and, in turn, buy fewer licences. A shift towards pay-per-use pricing, common in the agentic AI world, could make revenues less predictable.
There are also concerns that some enterprises could build their own software with the help of AI coding tools. Supply-chain startup Auger, for instance, said it built a custom CRM product using AI in just a few days. While most companies may still avoid building their own systems because of security, reliability and operational concerns, investors worry that a new generation of AI-native startups could emerge, offering better products at lower prices and putting further pressure on traditional SaaS providers.
Core holds
So far, however, these concerns have not shown up in Salesforce’s financial performance. Revenue grew at a compound annual growth rate (CAGR) of 12% over the past four years, rising from $26.5 billion in FY22 to $41.5 billion in FY26. Operating cash flow expanded even faster, at a CAGR of 26%.
Part of that growth reflects the resilience of Salesforce’s core business. Enterprise customers tend to be sticky because the company’s software is deeply embedded in their workflows and data-management systems. Switching vendors can be costly and complex, involving legal, compliance, technical and operational challenges.
Besides, Salesforce has integrated AI capabilities into its existing products. These products give higher returns on investment, and have driven new licence sales, Miguel Milano, Salesforce’s chief revenue officer, said earlier this year.
But some analysts are cautious. “Salesforce remains a deeply entrenched platform, yet we expect a structural reset driven by the AI transition that raises three core concerns: muted net new customer additions, limited upsell potential, and an underwhelming AI monetization pathway,” Bank of America analyst Tal Liani wrote in a note.
Agent army
Salesforce has been reorganizing itself around AI and using its own operations as a testing ground. Employees now interact daily with about 300 internal AI agents through Slack. The use of Slackbot alone has generated 3.8 million annualized hours of productivity gains, the company said.
While its headcount has been increasing, chief executive Marc Benioff said Salesforce has “almost not hired engineers” over the past two years, with its engineering workforce remaining at about 15,000 employees. Engineers increasingly work alongside AI coding tools, reviewing and directing their output rather than writing all codes manually. Salesforce expects to spend about $300 million on Anthropic tokens in 2026 to support internal automation and AI-assisted software development.
Hiring is now concentrated in sales. Sales teams are compensated based on how much customers actually use AI tools, rather than simply on contract signings. Executive bonuses are also tied to the number of tasks AI completes for customers. The goal is to align incentives around product adoption and usage rather than bookings alone.
Desi tailwind
Salesforce’s India operations have been growing faster than the company’s overall business. Although it operates from a smaller base, it has already achieved significant scale. Revenue from operations rose 47% year-on-year to ₹13,140.6 crore ($1.5 billion) in FY25, while profits increased at a similar pace to ₹1,292.3 crore. The revenue figure also includes receipts from global operations work carried out in India.
Its Hyderabad centre employs more than 16,000 people to support the company’s global operations. The Indian market has also been growing rapidly, driven by digitization.
Salesforce has built products specifically for the Indian market, such as Digital Lending Cloud. It has also signed deals with large companies. Air India uses the platform to manage more than 500,000 customer cases, while Tata Realty recently adopted Agentforce for 24/7 customer service, reducing first-response times from days to just eight hours. Future growth is expected to come from small and medium-sized businesses and from smaller cities. To tap these markets, Salesforce is launching Agentforce Voice in Hindi.
Buying growth
have long been a key part of Salesforce’s growth strategy, and recent deals have been closely aligned with its AI ambitions.
Last November, it completed the acquisition of Informatica, an enterprise data management software company, for about $8 billion and integrated its products into the Data 360 platform. In the first quarter of FY27, Informatica Cloud contributed $1.1 billion in annual recurring revenue. “It’s doing the heavy lifting in data management that every customer needs to move from pilot to production,” Benioff told analysts.
Its biggest acquisition so far has been Slack, which it bought for $27 billion in 2020. The company has integrated AI into Slack and positioned it as the primary interface for its Agentic Enterprise vision. Benioff said Slack was involved in nearly half of Salesforce’s million-plus deals in Q1FY27, up 80% year-on-year.
This month, Salesforce announced the acquisition of Contentful, a content-management platform with about 4,800 customers, which will be integrated into its existing products.
Yet none of these moves has helped lift Salesforce’s market capitalization this year. Investors are still waiting for stronger evidence that AI can deliver durable, long-term revenue growth.
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