Please ensure Javascript is enabled for purposes of website accessibility

Why Is Everyone Talking About Salesforce Stock?

By Leo Sun – Sep 25, 2021 at 7:55AM

Key Points

  • Salesforce hosted its latest investor day on Sept. 23.
  • The cloud giant raised its full-year revenue guidance and initiated its guidance for fiscal 2023.
  • It remains on track to more than double its annual revenue by fiscal 2026, and its stock still looks cheap relative to its growth.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The customer relationship management giant's latest investor day presentation impressed the market.'s (CRM 0.73%) stock price jumped 7% to an all-time high on Sept. 23 after the cloud services giant boosted its revenue forecast for the current fiscal year and initiated its guidance for fiscal 2023. It unveiled those updated numbers during its latest investor day presentation.

Let's review Salesforce's updated guidance, why it's attracting so much attention, and if investors should still buy this high-flying tech stock.

Salesforce Tower in San Francisco.

Image source: Salesforce.

Taking a look at Salesforce's new guidance

Salesforce now expects to generate $26.25 billion to $26.35 billion in revenue in fiscal 2022, which ends in January 2023. That's a $500 million increase from its prior forecast of $26.2 billion to $26.3 billion.

If we look back at Salesforce's guidance since the end of fiscal 2021, we'll notice that it's repeatedly raised its expectations for fiscal 2022:


Q4 2021

Q1 2022

Q2 2022

Investor Day

FY 2022 Revenue Guidance

$25.65 billion to $25.75 billion

$25.9 billion to $26 billion

$26.2 billion to $26.3 billion

$26.25 billion to $26.35 billion

Growth (YOY)





Source: Salesforce. YOY = Year over year.

Those gradual hikes might seem minor, but they indicate Salesforce is generating stronger-than-expected growth. They also suggest the company's recent takeover of Slack, which closed on July 21, is generating more revenue than it originally anticipated.

Salesforce also initiated its guidance for fiscal 2023. It expects to generate $31.65 billion to $31.8 billion in revenue for the year, which would equal 20.3%-20.9% growth from the midpoint of its fiscal 2022 guidance. Analysts had originally expected its revenue to rise 19.6% next year.

Salesforce also expects to generate a GAAP operating margin of 3%-3.5% and a non-GAAP operating margin of 20% in fiscal 2023. Both estimates would represent a significant year-over-year expansion from fiscal 2021 and 2022 -- even as its integration of Slack slightly reduces its operating margins.


FY 2021 (Actual)

FY 2022 (Estimate)

FY 2023 (Estimate)

GAAP Operating Margin




Non-GAAP Operating Margin




Source: Salesforce.

Why is Salesforce's new outlook attracting more bulls?

Last December, Salesforce management predicted the company would more than double its annual revenue from $21.25 billion in fiscal 2021 to over $50 billion in fiscal 2026. At the time, it predicted that growth would be driven by the expansion of its total addressable markets (TAM) for its sales, service, commerce, marketing, platform, integration, and analytics services.

Salesforce management reiterated that long-term revenue forecast at the company's latest investor day, as well as its bullish expectations for its main end markets. Between calendar 2021 and 2025, Salesforce expects its TAM to grow at a CAGR of 13%, and for its own growth to outpace the broader market. Salesforce's updated guidance at its latest investor day indicates it's still on track to hit its long-term targets.

Should you buy Salesforce's stock at its all-time high?

Salesforce's stock trades at 62 times forward earnings and 10 times this year's sales. That price-to-earnings ratio might seem a bit high, but cloud companies are usually judged by their revenues instead of their profits -- and Salesforce's price-to-sales ratio is fairly low compared to that of its industry peers. 

Adobe Systems (ADBE -0.44%), which is growing its annual revenue at a similar rate as Salesforce, trades at 19 times this year's sales. Adobe's cloud software business tends to be more seasonal than Salesforce's, and it hasn't offered investors any longer-term forecasts for the next few years.

Microsoft (MSFT -0.04%), which competes against Salesforce in the customer relationship management (CRM) market with Dynamics, trades at 12 times this year's sales -- but it's growing slower than Salesforce, and Dynamics remains a distant underdog in the CRM market.

Therefore, it's not too late to buy Salesforce. Its growth is impressive, its stock isn't expensive, and it's well-poised to profit from the digitization of businesses and a growing need for cloud-based services.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Leo Sun owns shares of The Motley Fool owns shares of and recommends Microsoft and The Motley Fool recommends Adobe Inc. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Salesforce, Inc. Stock Quote
Salesforce, Inc.
$153.35 (0.73%) $1.11
Microsoft Stock Quote
$247.49 (-0.04%) $0.09
Adobe Inc. Stock Quote
Adobe Inc.
$334.30 (-0.44%) $-1.48

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.