New York, Sept 5 (V7N) – Shares of Salesforce (CRM.N) fell nearly 8% on Thursday after the cloud software giant issued a softer-than-expected revenue forecast for its third quarter, raising concerns that returns from its ambitious AI investments may be slower to materialize.

Investor enthusiasm around artificial intelligence has driven heavy expectations for cloud companies to deliver meaningful returns on their billion-dollar AI bets. However, ongoing economic uncertainty is prompting many customers to reduce IT spending, putting additional pressure on software vendors.

Salesforce, which has aggressively rolled out AI features across its platforms, launched its AI agent platform "Agentforce" commercially in 2024. The platform is designed to automate tasks, streamline workflows, and improve margins. But despite these innovations, the company’s revenue forecast for Q3 landed between $10.24 billion and $10.29 billion—falling slightly below the average analyst estimate of $10.29 billion, according to LSEG data.

“This outlook is giving bears fresh ammo amid mounting fears that the software sector is ripe for disruption and skepticism over whether incumbents can fully monetize AI,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

In an effort to reassure shareholders, Salesforce also announced a $20 billion expansion to its existing share buyback program. However, the move did little to offset concerns about growth prospects.

“This growth outlook is uninspiring,” analysts at Oppenheimer noted, pointing to what they described as “a continuing tough macro environment for front-office software providers like Salesforce this year.”

Salesforce shares are down approximately 24% year-to-date. In response, the company has pivoted toward strategic acquisitions after years of limited M&A activity. In May, it acquired data management platform Informatica in an $8 billion deal aimed at enhancing its product offerings and profitability.

Compared to industry peers, Salesforce has underperformed in recent months. The company’s stock currently trades at 20.96 times its 12-month forward earnings, while competitors Microsoft and Oracle trade at 31.26 and 30.84, respectively.

Still, some analysts remain cautiously optimistic. "Second-quarter results and positive company commentary are sufficient at this juncture, considering CRM shares are trading near a historically low valuation level and at a deep discount to software peers,” analysts at J.P. Morgan stated.

The debate now shifts to whether Salesforce can convert its early AI momentum into sustained revenue growth—something Wall Street will be watching closely in the months ahead.

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