Salesforce Raised Guidance Again. Now It Has to Deliver the Revenue Acceleration

Salesforce Inc., ticker symbol CRM, recently released strong Q2 results that surpassed expectations, primarily due to the surge in demand for their AI tools such as Agentforce. The company reported revenues of $11.35 billion, which beat the expected figure of $11.32 billion, and earnings per share of $5.90 adjusted, compared to expectations of $3.27.

In response, Wall Street firm Argus raised Salesforce's price target to $300.00 from $290.00 and maintained a Buy rating. Salesforce has now raised its guidance for the second time, expecting revenue growth to accelerate during the second half of 2027, but this promise must be fulfilled, not just stated. The bull case for Salesforce post-earnings is simple: robust customer retention and performance growth, accelerating AI adoption, impressive cash generation, and raised revenue guidance.

Currently, the company's growth in remaining performance obligations (cRPO) stands at 14%, a critical factor supporting the revenue acceleration case. Salesforce's newly formed partnership with Anthropic is also adding to the bullish outlook, along with a $2.6 billion gain from strategic investments in the AI startup. The company's AI suite, including Agentforce and Data 360, has reached almost $3.9 billion in ARR, with over 3.2 billion Agentic Work Units delivered in Q2.

Additionally, Salesforce's premium Agentforce 1 Edition and Agentforce for Apps bundles saw bookings more than double from the previous quarter. Salesforce's management announced a full-year fiscal 2027 revenue guidance of $46.1 billion to $46.4 billion, up from the previous guidance of $45.9 billion-$46.2 billion. This raised guidance includes an adjustment reflecting $100 million of organic growth and $200 million from pending Contentful and Fin acquisitions, offset by a $100 million FX headwind.

While Salesforce's stock rallied more than 20% after its results, the optimism is already priced in. Hedge funds have also shown interest, with 99 holding positions in the stock as of Q2, down slightly from 101 in the previous quarter. Despite the potential of Salesforce, the story and the next few quarters will reveal whether AI adoption will be strong enough to lift the organic growth rate for the entire company.