Salesforce Inc. (CRM) Stock: Falls Over 5% on Execution Risks Despite Strong Q125 Earnings

TLDR

Salesforce stock drops 5% to $261.00 despite beating Q1 estimates Revenue grows 8% year over year to $9.83 billion Raised fiscal 2026 revenue guidance to $41.3 billion $8 billion Informatica acquisition raises execution concerns Analysts cautious despite continued AI-driven product momentum

Salesforce (NYSE: CRM) shares traded at $261.00, down 5.45% as of writing, after its Q1 fiscal 2026 earnings release on May 28, 2025.

Salesforce Inc. (CRM) 

The company reported stronger-than-expected quarterly results and raised full-year guidance, but investors grew wary of execution risks tied to its recent $8 billion acquisition of Informatica.

Strong Revenue and Solid Guidance

Salesforce posted Q1 revenue of $9.83 billion, an 8% increase year over year, beating Wall Street’s estimate of $9.75 billion. Subscription and support revenue rose 9% in constant currency, reflecting strong demand. The company lifted its fiscal 2026 revenue guidance to a range of $41.0 billion to $41.3 billion, up from the prior $40.5 billion to $40.9 billion. Adjusted earnings per share are now forecast between $11.27 and $11.33, exceeding previous projections.

📈 #FinancialNews Alert: Salesforce Stock plunges despite strong earnings! Investors shocked as acquisition news overshadows positive performance. Read more at: https://t.co/wjREp3LyEt

— Frankieangelo (@_frankieangelo) May 29, 2025

Non-GAAP operating margin stood at 32.3%, slightly below some expectations, but operating cash flow remained robust at $6.5 billion. Remaining performance obligations (RPO) rose 13% year over year to $60.9 billion, though current RPO slightly missed Wall Street expectations by 30 basis points.

AI and Informatica Acquisition

Salesforce is doubling down on artificial intelligence (AI), with its Agentforce product achieving over $100 million in annual recurring revenue (ARR) and attracting more than 4,000 paid customers. Its Data Cloud ARR surged past $1 billion, growing over 120% year over year, highlighting rapid AI-driven adoption.

However, the company’s planned $8 billion acquisition of data management firm Informatica stirred concern. Analysts at RBC Capital Markets downgraded Salesforce from outperform to sector perform, citing execution risks and worries that the acquisition could strain innovation in the company’s core business.

Analyst Reactions and Market Concerns

JPMorgan pointed to a slight Q1 operating margin miss and weaker CRPO growth, noting that Salesforce’s string of margin beats had been interrupted. Morgan Stanley’s Keith Weiss called the results “better than feared” given the uncertain macro environment, though he acknowledged the market’s cautious response.

Bernstein’s Mark Moerdler praised Salesforce’s resilience despite macroeconomic and geopolitical pressures, while Citi’s Tyler Radke saw the Q1 results as stable but not transformative. Still, recent tariff uncertainties and broader market volatility have made investors more sensitive to perceived risks, dampening the post-earnings reaction.

Financial Performance Overview

Despite strong three- and five-year returns of 59.13% and 50.31%, respectively, Salesforce has underperformed recently, with a year-to-date loss of 21.85% and a one-year decline of 3.40%. In contrast, the S&P 500 posted gains of 0.42% year to date and 12.14% over the past year. The company’s next earnings date is set between August 26, 2025, and September 1, 2025.

Investors now await Salesforce’s execution on its AI ambitions and the Informatica integration, both of which could shape its trajectory through fiscal 2026 and beyond.

 

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