Salesforce, Inc. (CRM) continues to dominate the Customer Relationship Management (CRM) landscape, demonstrating robust financial performance and strategic positioning for long-term growth. This report provides an in-depth analysis of Salesforce’s business model, competitive advantages, growth drivers, valuation, and associated risks, culminating in a reiterated “Buy” recommendation and a price target of $320.
Executive Summary
Salesforce’s Q1 FY26 results reaffirm its leadership in the expanding CRM market. Driven by AI integration, a robust product ecosystem, and strategic acquisitions, the company is poised for sustained growth. While macroeconomic headwinds present challenges, Salesforce’s diversified customer base and innovative solutions provide resilience. Our valuation, based on a blend of DCF and comparables analysis, supports a $320 price target, representing a compelling investment opportunity.
Industry Overview
The global CRM market, valued at $114.4 billion in 2025, is projected to reach $168 billion by 2030, reflecting a 10.8% CAGR.1 Key tailwinds include accelerating AI adoption, ongoing cloud migration, and increasing demand for hyper-personalised customer experiences. Salesforce is well-positioned to capitalise on these trends, given its established market leadership and strategic focus on AI-powered solutions.
Company Analysis
Salesforce offers a comprehensive suite of cloud-based enterprise software solutions through its Customer 360 platform. Key offerings include Sales Cloud, Service Cloud, Marketing/Commerce Cloud, Platform+Slack, and Data Cloud & Einstein AI. The company boasts a diverse customer base of over 150,000 enterprises, including a significant portion of Fortune 500 companies.2
Investment Thesis
Our investment thesis rests on Salesforce’s durable competitive advantages, its ability to monetise AI capabilities, and its strategic positioning within a secular growth market. The company’s deep integration across its product ecosystem, coupled with the data network effects of its Data Cloud, create significant switching costs for customers. Moreover, Salesforce’s investments in AI, exemplified by Einstein AI, are driving pricing power and enhancing customer engagement. These factors, combined with the company’s strong financial performance and consistent execution, underpin our positive outlook.
Valuation & Forecasts
Financial Forecasts (USD Billions)
| Metric | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue | 41.3 | 45.4 | 49.9 |
| EBITDA | 11.3 | 12.8 | 14.4 |
| FCF | 7.8 | 8.8 | 9.9 |
Our valuation incorporates a Discounted Cash Flow (DCF) model, using a weighted average cost of capital (WACC) of 8.5% and a terminal growth rate of 4%. We also considered a comparables analysis, benchmarking Salesforce against key industry peers. Our base case DCF analysis, assuming a FY26 revenue of $41.3 billion, yields a target price of $320. Scenario analysis, incorporating bull and bear case scenarios, further supports our valuation range.
Risks
Key risks include macroeconomic sensitivity, particularly regarding potential slowdowns in IT spending, execution risks associated with integrating acquisitions like Informatica, and competitive pressures from established players like Microsoft. Regulatory changes, especially concerning data privacy, also pose a potential headwind. We believe Salesforce’s strong leadership team, diversified revenue streams, and innovative product portfolio mitigate these risks, but ongoing monitoring is crucial.
Recommendation
We maintain a “Buy” rating on Salesforce with a 12-month price target of $320. The company’s dominant market position, coupled with its AI-driven growth trajectory and strong financial profile, present a compelling investment opportunity. Key catalysts to monitor include Q2 cRPO growth, Einstein adoption metrics, and SMB retention rates.
1Source: “Global CRM Market is Projected to Reach USD 168 billion by 2030, Registering a CAGR of 10.8% during the Forecast Period” https://www.marketresearchfuture.com/reports/customer-relationship-management-market-1176
2Source: Salesforce Investor Relations. https://investor.salesforce.com/news/news-details/2025/Salesforce-Reports-Record-First-Quarter-Fiscal-2026-Results/default.aspx
