Salesforce shares fall as KeyBanc downgrade tests AI platform case
KeyBanc cut Salesforce to a hold-equivalent rating, while Jim Cramer said his trust would keep its small position as debate over Agentforce intensifies.
By Marcus V. Thorne · Markets Editor
· 3 min read
Salesforce shares fell more than 2% on Thursday to about $162.50 after KeyBanc Capital Markets downgraded the enterprise software company to a hold-equivalent rating and withdrew its $290 price target. The move added pressure to a stock that CNBC reported is down about 38% this year, as investors assess whether artificial intelligence will weaken the company’s traditional software model or support a new growth channel.
KeyBanc analyst Jackson Ader wrote that the information gathered by the firm, including financial and anecdotal signals, was “not rebounding or trending in the right direction.” He said feedback from customers had not given the firm enough confidence in Salesforce’s Agentforce product, the AI platform the company is using to respond to questions about the future of software-as-a-service businesses.
Agentforce lets Salesforce customers create AI agents inside the company’s sales, marketing and customer service applications. Those agents are designed to carry out tasks without constant human direction, a feature Salesforce has positioned as an extension of its existing workflow tools rather than a separate product line.
Ader said, according to CNBC, that customer discussions pointed to two recurring problems: corporate data is often not prepared well enough for effective AI use, and Agentforce has yet to meet some buyers’ expectations. He also wrote that valuation was the main remaining argument for a more positive stance on Salesforce shares, which led KeyBanc to step back from its prior view.
Salesforce chief executive Marc Benioff disputed the downgrade in a message to CNBC’s Jim Cramer, who said on air that Benioff described the KeyBanc note as a “bad call.” Cramer said Benioff argued that other evidence showed Agentforce was performing better than KeyBanc suggested. Cramer said he respected both Ader and Benioff, while adding that the Salesforce chief deserved some benefit of the doubt.
The downgrade comes amid a broader argument over whether generative AI will reduce demand for subscription software sold on a per-seat basis. Investors are questioning whether companies can build more tools internally, reducing spending on third-party platforms. Bloomberg News reported Thursday that Starbucks is using AI to develop internal applications that could replace some software bought from Microsoft and IBM.
Supporters of established software vendors argue that the risk is overstated because large companies keep critical customer and operational data inside long-standing systems of record. Replacing those systems can be expensive and technically difficult, even when new AI development tools make custom applications easier to create.
Salesforce has also been buying companies to strengthen Agentforce, according to CNBC, as it seeks to embed AI functions across its product suite. In May, Salesforce said Agentforce had reached $1.2 billion in annual recurring revenue. Benioff told Cramer’s “Mad Money” after that earnings report that many predictions tied to a “SaaSpocalypse” had not materialised.
Cramer said his charitable trust remains long Salesforce, although CNBC reported the position is the smallest in the portfolio. The trust holds 200 shares, representing less than 1% of its assets, which limits the effect of Salesforce’s stock moves on overall performance. Cramer said the trust would watch whether Agentforce revenue continues to grow and becomes a more material part of Salesforce’s business.
This story draws on original reporting from CNBC.
