Salesforce Set to Report Q2 Earnings: Buy, Sell or Hold the Stock?

Salesforce, Inc. CRM is scheduled to release second-quarter fiscal 2027 results on Aug. 26.

For the second quarter, the company expects total revenues between $11.27 billion and $11.35 billion (midpoint at $11.31 billion). The Zacks Consensus Estimate for second-quarter revenues is pegged at $11.32 billion, which indicates an increase of 10.6% from the year-ago quarter’s reported figure.

CRM anticipates non-GAAP earnings per share in the band of $3.25-$3.27 for the second quarter. The consensus mark for non-GAAP earnings has remained unchanged at $3.27 over the past 60 days, which suggests a 12.4% jump from the year-ago quarter’s level.

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Salesforce’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 17.3%.

What the Zacks Model Unveils for CRM

Our proven model does not conclusively predict an earnings beat for Salesforce this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Earnings ESP: Salesforce has an Earnings ESP of 0.00% at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CRM currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Influence Salesforce’s Q2 Results

Salesforce appears well-positioned to report decent second-quarter results, driven by its strategic focus on digital transformation and cloud solutions. With businesses globally undergoing digital overhauls, Salesforce's commitment to aligning its product offerings with customer needs is likely to have boosted its revenues for the quarter.

The growing demand for generative AI-enabled cloud solutions has been a major catalyst for Salesforce. By embedding generative AI tools across its products, the company not only enhances customer engagement but also strengthens its competitive position in the customer relationship management space. This forward-thinking approach might have significantly contributed to its top-line growth during the to-be-reported quarter.

Salesforce’s ability to deepen relationships with leading brands across industries and expand its reach in key geographic markets remains a cornerstone of its growth strategy. The company’s increasing footprint in the public sector is likely to have provided a further boost, unlocking new growth opportunities during the second quarter.

The acquisitions of Zoomin Software, Informatica, Cimulate and Momentum have been pivotal in enhancing Salesforce's capabilities and diversifying its revenue base. These additions are likely to have driven higher subscription revenues, particularly across its core cloud services.

Disciplined spending may have boosted Salesforce’s profitability in the second quarter. The company’s first-quarter fiscal 2027 non-GAAP operating margin expanded 250 basis points to 34.8%, mainly driven by the benefits of operating leverage and effective cost management. The trend is anticipated to have continued in the to-be-reported quarter as CRM emphasizes productivity gains from the internal adoption of AI tooling.

CRM’s Stock Price Performance & Valuation

Year to date, Salesforce shares have plunged 21%, underperforming the Zacks Internet – Software industry’s decline of 4.1%. Compared to its peers, CRM stock has also underperformed other enterprise software makers, including Microsoft Corporation MSFT, SAP SE SAP and ServiceNow, Inc. NOW. Year to date, shares of Microsoft, SAP and ServiceNow have declined 0.1%, 10% and 16.1%, respectively.

Salesforce YTD Price Return Performance

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Now, let’s look at the value Salesforce offers investors at the current levels. CRM stock is trading at a discount with a forward 12-month P/E of 14.05X compared with the industry’s 27.66X.

Salesforce Forward 12-Month P/E Ratio

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CRM stock also trades at a discounted multiple compared with ServiceNow, Microsoft and SAP. At present, ServiceNow, Microsoft and SAP have P/E multiples of 27.60, 24.16 and 23.99, respectively.

Investment Thesis on Salesforce Stock

Salesforce remains the global leader in customer relationship management, a position it has consistently held, according to Gartner. However, the company is no longer just a customer relationship management software provider. Rather, it is evolving into a full-scale enterprise platform.

Salesforce is building a broader enterprise ecosystem centered on AI, data and collaboration. Acquisitions like Slack and Informatica highlight this ambition, while smaller AI-focused deals such as Fin and Zoomin Software show management’s urgency in staying ahead of the curve.

AI is now central to Salesforce’s growth story. Salesforce has been embedding generative AI across its offerings to help companies automate processes, improve decision-making and strengthen customer relationships.

Its latest innovation, Agentforce, is gaining momentum. Combined AI and Data, including Agentforce, Data 360 and Informatica Cloud, annual recurring revenues (ARR) reached $3.4 billion in the first quarter of fiscal 2027, more than tripling from the year-ago period. Agentforce alone generated $1.2 billion in recurring revenues, up 205% year over year. Nearly half of Agentforce and Data 360 bookings came from existing customers, showing Salesforce’s success in cross-selling AI features to its user base.

Conclusion: Hold CRM Stock Ahead of Q2 Results

Salesforce’s leadership in customer relationship management and aggressive AI expansion creates a solid foundation for sustained growth. Its ability to deliver earnings growth despite ongoing macroeconomic uncertainties makes the stock worth holding. An impressive earnings surprise history and a lower valuation multiple than the industry also suggest staying invested in CRM stock.

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This article originally published on Zacks Investment Research (zacks.com).

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