Salesforce gains after BofA upgrade on enterprise AI prospects

what happened

Salesforce shares gained more than 3% in premarket trading on Monday after Bank of America raised its rating on the company from Underperform to Buy. Seeking Alpha reported that the bank sees little likelihood of large companies replacing software platforms used to manage data, business processes and compliance as they adopt AI.

BofA said AI could make companies more dependent on existing software platforms rather than displace them. Its price target for CRM was increased to $285 from $160. The new target values the stock at 16 times expected 2027 free cash flow, compared with 9 times previously and a peer average of 15 times.

Analyst Tal Liani said Salesforce is positioned to take part across the AI value chain, limit the threat of disintermediation by foundation models, and support higher platform usage, premium upgrades and long-term revenue acceleration. The brokerage also pointed to improving momentum in new annualized order value and stronger Slack performance. It now expects subscription and support revenue growth of 10.4% in fiscal 2028 and 10.5% in fiscal 2029, versus previous estimates of 9.9% and 10.2%. BofA warned that slower-than-expected AI adoption remains a near-term risk because Salesforce’s AI-related revenue is still small.

why it matters

The upgrade reflects expectations that enterprise AI will reinforce demand for established software platforms instead of quickly replacing them. Investors will likely focus on order growth, Slack’s performance and the pace at which AI-related revenue expands.

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