Salesforce faces downgrade as AI strategy raises concerns

Salesforce, a prominent player in enterprise software, has encountered significant challenges, particularly following a recent downgrade by analysts at D.A. Davidson. This downgrade, which shifted the stock's rating to underperform sell from neutral, was a considerable setback for the company. The analysts expressed concerns that Salesforce's ambitious shift towards artificial intelligence through its new Agentforce offering may be detracting from its core business operations. Their price target was also reduced from $250 per share to $200 per share, reflecting a pessimistic outlook on the company's strategic direction. The release of Agentforce, which became available to clients in late October 2024, aimed to enable businesses to develop AI agents capable of performing tasks autonomously. Initially met with enthusiasm from investors, this technology was expected to place Salesforce at the forefront of AI innovations in enterprise solutions. However, skepticism has since grown about whether the focus on Agentforce could undermine Salesforce's existing business segments, particularly past acquisitions like Slack and MuleSoft. Market conditions have also played a role in Salesforce's stock struggles, as a general decline in the tech-heavy Nasdaq contributed to the stock's fall. The index saw a drop of 2.55% recently, causing various tech stocks to reflect similar downturns. The broader climate of economic uncertainty, with fears of a recession potentially fueled by tariffs, has heightened investor tension surrounding market performance, accentuating issues faced by companies like Salesforce. Moreover, turnover in Salesforce's executive team has been flagged as another factor contributing to the stock's volatility. Concerns peaked after the company reported mixed earnings in February 2025, which left some investors feeling disappointed with its financial performance. Despite these challenges, Jim Cramer of the CNBC Investing Club expressed that he believes in the long-term viability of Salesforce, citing that CEO Marc Benioff views Agentforce as a foundational strategy that will eventually benefit the organization as a whole.