Salesforce is having its worst year in large-cap tech with shares down 25%, making it the second-worst performer in the Dow behind only UnitedHealth. As the company prepares to report quarterly results Wednesday, investors are zeroing in on CEO Marc Benioff's AI strategy, particularly whether the $100 million Agentforce platform can reignite growth after four straight quarters of single-digit revenue increases.
Salesforce finds itself in an unfamiliar position as tech's biggest disappointment of 2025. The CRM giant that once toppled Oracle in market cap during the pandemic boom now trails its former rival by a staggering $400 billion. Wednesday's earnings report will test whether CEO Marc Benioff can convince Wall Street that his AI bet is worth the wait.
The numbers tell a brutal story of momentum lost. Salesforce shares have crashed 25% this year while Oracle has soared 34%, creating one of tech's most dramatic reversals. The company that Benioff built to challenge Larry Ellison's database empire is now worth $239 billion compared to Oracle's $630 billion valuation. On the Bloomberg Billionaires Index, Ellison sits at number two with $278 billion while Benioff has dropped to 318th place at $10.4 billion.
Investors are growing impatient with four consecutive quarters of single-digit revenue growth. Analysts expect the streak to continue with revenue growth of just 8.7% to $10.1 billion for the latest quarter, according to LSEG data. The challenge runs deeper than cyclical softness - Salesforce is grappling with saturation in its core customer relationship management market just as AI threatens to automate away some of its business model.
Benioff acknowledged the disruption in June, telling investors that AI already handles 30% to 50% of the company's work. The admission helped explain why Salesforce reportedly cut 1,000 jobs earlier this year, even as it scrambled to position itself for the AI transition.
Enter Agentforce, Salesforce's answer to the AI challenge and potentially its salvation. The platform, which automates customer support requests, launched in October and quickly scaled to $100 million in annualized revenue by May. "It's not significant enough to move the needle on this business, given the scale," Wells Fargo analyst Michael Turrin told CNBC, capturing the market's skepticism.
The irony isn't lost on industry observers. While Salesforce struggles to monetize AI, Oracle has become an unexpected beneficiary of the boom. The database company that seemed destined for legacy status has landed major cloud infrastructure deals with OpenAI and Elon Musk's xAI, transforming its growth trajectory.
Behind the scenes, activist investors are circling again. Starboard Value, which first targeted Salesforce in 2022, boosted its stake by 47% in the second quarter according to SEC filings. The firm's Jeff Smith praised the company's profitability improvements but insisted "there's a lot more to go" in an October interview.
The pressure extends beyond stock performance to fundamental metrics. Investors are watching current remaining performance obligations at constant currency, which measures expected revenue over the next year. Operating chief Robin Washington projected 9% for the August quarter, below the 10% threshold that would signal sustainable double-digit growth ahead.
Salesforce is betting big on inorganic expansion to jumpstart growth. The company's $8 billion acquisition of data management firm Informatica represents its largest deal since the $27.1 billion Slack purchase in 2021. After years of restraint on M&A spending, Benioff is returning to the playbook that built his empire.
Not all investors have lost faith. Vulcan Value Partners added 345,000 shares in the second quarter, bringing its total Salesforce holdings to $300 million. "The thing that we focus on is the value per share of the business," portfolio manager Stephen Simmons explained. "That is continuing to grow. There's nothing we're seeing that's saying this company is going away anytime soon."
The competitive dynamics highlight how quickly fortunes can shift in enterprise software. "Funny how things go around and come around," Simmons observed. "Benioff starts Salesforce as a cloud-native enterprise company, and Larry's over at Oracle trying to transition his on-prem customers to the cloud."
Wednesday's earnings will reveal whether Benioff's AI pivot can restore Salesforce to its former glory or if the company faces a prolonged period of modest growth. With Agentforce still in early stages and Oracle capturing AI infrastructure deals, the CRM leader needs to prove it can adapt to a world where artificial intelligence is reshaping enterprise software. Investors want double-digit growth and margin expansion - anything less could invite more activist pressure and further stock declines.
