Salesforce (CRM +2.36%) posted its latest earnings report on Feb. 25. For the fourth quarter of fiscal 2026 (which ended on Jan. 31), the cloud software giant's revenue rose 12% year over year to $11.2 billion and matched analysts' expectations. Its adjusted EPS grew 37% to $3.81, beating the consensus forecast by $0.76 per share.
For the full year, Salesforce's revenue rose 10% to $41.5 billion as its adjusted earnings grew 23% to $12.52 per share. For fiscal 2027, it expects its revenue to rise 10%-11% -- with its recent acquisition of Informatica contributing roughly three percentage points to that growth.
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Salesforce also set a goal to generate $63 billion in revenue in fiscal 2030, which would equal a 4-year CAGR of 10% from fiscal 2026. That outlook is stable, but it would still grow more slowly than many other cloud giants, including Microsoft (MSFT 0.75%) and Google's parent company Alphabet (GOOG 1.69%) (GOOGL 1.66%).
Salesforce's high-growth days are over, but it plans to reward its patient investors with a fresh $50 billion buyback authorization. That's equivalent to 28% of its $180 billion market cap, but does it make its stock a worthwhile investment in this choppy market?
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Key Data Points
What the $50 billion authorization actually means
During the conference call, CEO Marc Benioff said Salesforce was launching the new buyback because its stock was trading at "low prices". Yet its stock isn't really that cheap.
Over the past 12 months, Salesforce's stock declined about 36%. That decline was primarily driven by slowing sales growth, concerns about competition from newer generative AI platforms, and the broader sell-off across the tech sector.
At $200, Salesforce's stock might seem undervalued at 15 times this year's adjusted earnings. However, analysts expect its adjusted EPS to rise by only 6% in fiscal 2027. Therefore, it merely seems reasonably valued relative to other slower-growth tech stocks. By generally accepted accounting principles (GAAP), it's even more expensive at 27 times this year's earnings.
Salesforce's $50 billion authorization replaces all of its previous authorizations, and it didn't set any precise dates for its new buybacks. It also isn't obligated to spend all of that money. In other words, it won't actually matter unless the company actually starts repurchasing its shares. Over the past three years, Salesforce bought back $28 billion in shares -- yet those buybacks reduced its outstanding shares by only 4%. That's because it still pays out substantial, dilutive stock-based compensation expenses every year.
Is it the right time to buy Salesforce?
Salesforce's big buyback plan might stabilize its earnings, but it's also an admission that it's run out of fresh ways to expand. Its new Agentforce agentic AI platform might keep it in the AI race, but it won't become a core growth engine anytime soon. So for now, I'd avoid Salesforce -- even if it plans to plow a lot of its excess cash into big buybacks and dividends.
