BofA reiterates Salesforce “Underperform”: AI progress is improving, but organic growth remains key

Overview

This is a preview of Salesforce's 2Q27 results. BofA believes that the AI product portfolio and Agentforce have demonstrated strong growth, but the market needs to see that organic growth in the core subscription business, cRPO, and booking momentum are sufficient to support acceleration in the second half; it therefore reiterates its “Underperform” rating and $160.00 price target.

Core views

Salesforce will report 2Q27 results on August 26. Ahead of earnings, BofA focuses on three validations: whether the company can deliver the expected acceleration in growth in the second half, whether cRPO and underlying booking momentum improve, and the pace of Agentforce adoption and monetization. The firm forecasts 2Q27 revenue of $11.3 billion, up 10.5% year over year; excluding Informatica, growth would be 6.6%. Management's guidance implies constant-currency growth of approximately 6% to 6.5%, below 7.1% in 1Q. Even with stronger growth in Agentforce and Data 360, organic growth remains the core market debate. The report particularly focuses on the subscription revenue outlook and believes investors will seek evidence that organic growth and cRPO can support acceleration in the second half. For the full year, BofA forecasts FY27 revenue growth of 11.1%, with Informatica contributing approximately 3 percentage points, implying organic growth of about 8%. The firm forecasts 2Q cRPO growth of 14% year over year. These forecasts reflect its view that incremental growth from acquisitions cannot replace validation of growth in the core business itself; if organic growth, renewals, and booking momentum are insufficient, the foundation for second-half acceleration will be weak. AI is another main theme of the report. Agentforce ARR reached $1.2 billion in 1Q, up 205% year over year and 50% quarter over quarter, indicating progress in product adoption, but the report emphasizes that its current contribution to overall results remains relatively limited. Salesforce is expanding its AI products and monetization pathways: it recently announced the $3.6 billion acquisition of Fin, an AI customer-service agent capable of autonomously resolving customer inquiries, to expand packaged offerings for SMB and commercial customers; the acquisition of m3ter adds metering and billing capabilities to support usage-based and outcome-based pricing. The firm believes the near-term real challenge is whether the company can withstand AI-driven business disruption and turn innovation and acquisitions into growth tailwinds. The report's structural concern is that agentic AI may weaken Salesforce's historically per-seat-based growth model: automation could directly suppress the economics of new seats, renewal price increases, and upselling. BofA therefore believes the company is supported more by its existing customer stickiness than by growth drivers; this supports the use of a more mature valuation framework and limits the potential for continued valuation re-rating. On valuation, the $160.00 price target is based on 9x BofA CY27E EV/FCF, at the low end of the 8x–14x range for software peers, reflecting the firm's view of its relatively weaker growth profile. The report reiterates its “Underperform” rating.

Analysis framework

The report first uses an earnings-preview framework to assess whether revenue, organic growth, cRPO, and booking momentum can support second-half acceleration; it then analyzes Agentforce ARR, product expansion, acquisitions, and monetization pathways, contrasting these developments with the potential disruption of AI to the traditional per-seat pricing model. Finally, it compares the CY27E EV/FCF multiple with the software-peer range to form its price target and rating conclusion.

Methodology notes

• Valuation Methodology

  CY27E EV/FCF valuation

  The report values Salesforce using enterprise value relative to projected free cash flow: it applies 9x CY27E EV/FCF and compares it with the 8x–14x range for software peers to reflect its relatively weaker growth profile.

• Industry/Value Chain Analysis FrameworkUpstream-Midstream-Downstream Value Chain Transmission

  Transmission analysis of AI automation's impact on per-seat pricing, renewal price increases, and upselling

  The report analyzes how agentic AI may affect the growth and monetization economics of Salesforce's core business by reducing demand for new seats and suppressing renewal price increases and upselling.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Salesforce Inc (CRM)

  AI product adoption, acquisitions, and new metering and billing capabilities may support growth, but agentic AI could also disrupt its traditional per-seat pricing model.

  Strengths

  Agentforce 1Q ARR reached $1.2 billion, up 205% year over year and 50% quarter over quarter; Data 360 growth is strong; the Fin and m3ter acquisitions expand AI product and monetization capabilities.

  Weaknesses

  Organic growth is slowing, and AI currently makes a relatively limited contribution to overall results; the core business faces maturation pressure.

  Comparison

  The $160 price target implies 9x CY27E EV/FCF, below or at the low end of the 8x–14x range for software peers, reflecting a relatively weaker growth profile.

  Risks

  Slower-than-expected transition to AI monetization, intensifying competition, greater upselling and pricing pressure, and insufficient organic growth.

Key data

• 2Q27 Revenue Forecast$11.3 billionUp 10.5% year over year; growth of 6.6% excluding Informatica
• 2Q27 Constant-Currency Growth GuidanceApproximately 6% to 6.5%Below 7.1% in 1Q
• 2Q27 cRPO Growth Forecast14%Year over year
• FY27 Revenue Growth Forecast11.1%Includes approximately 3 percentage points of contribution from Informatica, implying organic growth of about 8%
• Agentforce ARR$1.2 billion1Q level; up 205% year over year and 50% quarter over quarter
• Fin Acquisition Amount$3.6 billionTo expand packaged AI customer-service agent offerings for SMB and commercial customers
• Price Target Valuation Basis9x CY27E EV/FCFAt the low end of the 8x–14x range for software peers

Impact & implications

The report believes that AI product expansion and the Fin and m3ter acquisitions can strengthen Salesforce's AI product offerings and its usage-based and outcome-based pricing capabilities, but AI's near-term contribution remains limited. For earnings and valuation, the key question is whether organic growth, cRPO, and booking momentum can support second-half acceleration, and whether the company can turn AI innovation into growth rather than absorb disruption to its traditional per-seat model.

Risks

• AI monetization transition is slower than expected.
• Competition causes growth to fall below expectations.
• Declining upselling efficiency and increased pricing pressure.
• Lack of organic growth.

What to watch

• Whether 2Q27 organic revenue growth improves and provides a basis for second-half growth acceleration.
• Whether cRPO and underlying booking momentum support management's expectations for second-half growth.
• Customer adoption and monetization progress for Agentforce.
• The subscription revenue outlook.