Salesforce stock's a bargain ahead of earnings: buy or sell?

Salesforce stock has moved from one of the top gainers on Wall Street to a fallen angel.

It has slumped to $185, down sharply from last year's high of $366, a drop that has erased billions of dollars in value as the market capitalization has dropped from $352 billion to the current $173 billion.

So, will this software stock rebound as it becomes a bargain ahead of earnings?

Why has Salesforce stock suffered a $180 billion wipeout?

Salesforce stock has crashed sharply in the past few months, mirroring the performance of other software companies like Adobe, ServiceNow, Intuit, and Atlassian that have shed billions of dollars in value.

The main concern is that the company will face substantial challenges as companies build new competing artificial intelligence tools. A good example of this is Claude, which has launched several products in the past few weeks.

The decline has mirrored that of other companies that have dropped because of the lingering fears of disruption by AI tools. For example, companies like London Stock Exchange, RELX, and FactSet have dropped amid fears that AI will disrupt the financial data industry.

Salesforce stock price has also dropped because of the management’s embrace of growth through acquisition. For example, it recently acquired companies like Informatica, Momentum, Cimulate, and Doti in a move to become a major player in the AI industry.

At the same time, investors are concerned about its organic growth trajectory. The most recent results showed that its third-quarter revenue jumped by 9% in the third quarter to over $10.3 billion, with its remaining performance obligations (RPO) rising by 12% to over $59.5 billion.

Salesforce earnings ahead 

The next important catalyst for the Salesforce stock price will be the upcoming financial results, which will come out next week.

Wall Street analysts believe that the company’s revenue rose to $11.1 billion, up by 11.8% in the same period in 2025. This growth will lead to an annual revenue of over $41 billion, up by 9.48% YoY.

The company’s earnings-per-share are expected to show that the earnings per share rose to $3.05 from $2.78 in the same period in 2024. Salesforce has a long history of doing better than estimates.

On the positive side, there are signs that the company has become a bargain. For example, the average estimate of the CRM stock is $318, higher than the current $185.

At the same time, the company is trading at a forward PE multiple of 15, much lower than the sector median of 23 and the five-year average of 35. 

The same is true with its rule-of-40 multiple, which currently stands at 41%. It is based on the EBITDA margin of 30% and a forward revenue growth of 11%.

Salesforce stock price technical analysis 

CRM stock price chart  |Source: TradingView 

The daily timeframe chart shows that the CRM stock price has come under pressure in the past few months, moving from a high of  $366 in January 2025 to the current $185.

It has remained below the 50-day and 100-day Exponential Moving Averages (EMA). Also, the Supertrend indicator has remained in the red since January 12.

On the positive side, the stock has now become oversold as the Relative Strength Index has dropped to the oversold level of 30.

Therefore, with sentiment this weak, there is a likelihood that the stock will bounce back after earnings. The next key level to watch will be at $225, the lowest level in April, August, and November last year.