Software Stocks Face Increased Selling Risks Amid AI Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy CRM?
Source: CNBC
- Market Panic Intensifies: Software stocks are facing indiscriminate selling due to fears of AI-driven disruptions, with companies like ServiceNow, Salesforce, and Intuit experiencing significant declines of 28%, 26%, and 34% year-to-date, respectively.
- Cautious Investor Sentiment: Cramer notes that while software companies' profits have not collapsed, Wall Street's concerns about their future have led to a shrinking price-to-earnings ratio, creating challenges for investors in an uncertain market environment.
- Sector Rotation Phenomenon: Some investors have shifted towards sectors heavily reliant on software, such as banks and industrials, but the price increases in these stocks have limited new investment opportunities, highlighting the importance of selectivity in the current market.
- Winners and Losers Divergence: Cramer suggests that market logic indicates users (like banks and consumer goods companies) will emerge as winners, while software providers face pressure, although the market is not always rational, which may impact investment strategies.
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Analyst Views on CRM
Wall Street analysts forecast CRM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CRM is 326.95 USD with a low forecast of 223.00 USD and a high forecast of 405.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
42 Analyst Rating
31 Buy
10 Hold
1 Sell
Moderate Buy
Current: 210.810
Low
223.00
Averages
326.95
High
405.00
Current: 210.810
Low
223.00
Averages
326.95
High
405.00
About CRM
Salesforce, Inc. is a provider of customer relationship management (CRM) technology. The Company helps organizations of any size reimagine their business for the world of artificial intelligence (AI). With Agentforce, its platform, organizations can bring humans together with AI agents to drive customer success on one deeply unified platform. With the Salesforce platform, it delivers a single source of truth, connecting customer data with integrated AI across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere. Agentforce is a new layer of the Salesforce platform that enables companies to build and deploy AI agents that can respond to inputs, make decisions and take action autonomously across business functions. Agentforce includes a suite of customizable agents for use across sales, service, marketing and commerce. Datablazer is a data-driven innovator, which leverages the Company’s platform to unlock insights and drive decisions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Client Success Stories: Salesforce's clients, including FedEx and Formula 1, achieved a 2000% return on investment and an 80% improvement in customer service response times through AI, respectively, showcasing the effectiveness of its software and strong market demand.
- Financial Health Status: With total debt at $11.6 billion and net cash at $7.2 billion, Salesforce's 78% gross margin and 22% operating margin indicate robust profitability, suggesting that its debt levels are manageable and future growth remains promising.
- Valuation and Market Outlook: Currently, Salesforce's P/E ratio stands at 34.7, lower than Microsoft and Oracle, suggesting its stock is undervalued; following market corrections, a rebound is anticipated in 2026, reflecting its fundamentally strong position.
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Asia-Pacific Markets Decline Amid Tech Stock Sell-Off
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- Australian Market Slightly Lower: The S&P/ASX 200 index dropped by 0.22%, indicating uncertainty in the market regarding global economic prospects, particularly in light of poor tech stock performance.
- Mixed Performance in South Korea: While the Kospi index rose by 0.4% and the small-cap Kosdaq gained 1.01%, overall market sentiment remains influenced by fluctuations in the U.S. market, showcasing investor caution.
- Hong Kong Hang Seng Futures Decline: Hang Seng index futures were at 26,590, lower than the benchmark's 26,834.77, suggesting a lack of confidence in future economic recovery, which may affect investor decisions.
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- Market Decline: The S&P 500 index fell by 0.84%, the Dow Jones by 0.34%, and the Nasdaq 100 by 1.55%, indicating a sharp sell-off after reaching record highs, which negatively impacted investor sentiment.
- Tech Sector Retreat: Data service and software stocks plummeted following the release of an automation tool by AI firm Anthropic, with Thomson Reuters and EPAM Systems down over 15% and 13% respectively, reflecting a loss of confidence in tech stocks.
- Precious Metals Rally: Gold prices surged over 6% and silver over 8%, leading to gains in mining stocks, with Hecla Mining and Freeport McMoRan rising more than 8% and 6% respectively, indicating increased demand for safe-haven assets.
- Economic Outlook Improvement: Richmond Fed President noted an improving US economic outlook despite ongoing risks, with markets focusing on upcoming economic data and the passage of a spending bill to gauge future economic trends.
See More
Software Stocks Face Increased Selling Risks Amid AI Concerns
- Market Panic Intensifies: Software stocks are facing indiscriminate selling due to fears of AI-driven disruptions, with companies like ServiceNow, Salesforce, and Intuit experiencing significant declines of 28%, 26%, and 34% year-to-date, respectively.
- Cautious Investor Sentiment: Cramer notes that while software companies' profits have not collapsed, Wall Street's concerns about their future have led to a shrinking price-to-earnings ratio, creating challenges for investors in an uncertain market environment.
- Sector Rotation Phenomenon: Some investors have shifted towards sectors heavily reliant on software, such as banks and industrials, but the price increases in these stocks have limited new investment opportunities, highlighting the importance of selectivity in the current market.
- Winners and Losers Divergence: Cramer suggests that market logic indicates users (like banks and consumer goods companies) will emerge as winners, while software providers face pressure, although the market is not always rational, which may impact investment strategies.
See More
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- Software Stocks Performance: Software stocks have experienced a poor start to the year, indicating a challenging market environment.
- Technical Indicators: Current technical indicators suggest that there may not be an immediate recovery for these stocks.
See More
AI Panic Strikes Market as Software and Legal Services Suffer Major Setbacks.
- AI's Impact on Stock Market: The anticipated positive influence of artificial intelligence on the stock market has not materialized as expected.
- Market Performance: Despite initial optimism, stock market performance has been lackluster, raising questions about the actual benefits of AI in trading.
- Investor Sentiment: Investor confidence appears to be wavering as the promised AI-driven gains fail to materialize.
- Future Outlook: Analysts are reconsidering the role of AI in financial markets, suggesting a more cautious approach moving forward.
See More
Salesforce's 2025 Performance Review and Outlook
- Performance Decline Reasons: Despite Salesforce's 9% year-over-year revenue growth in 2025, its stock fell 33.7% due to missing Wall Street's growth expectations, contrasting sharply with the S&P 500's 16% rise, indicating market concerns about its growth potential.
- Client Success Stories: Salesforce's clients, including FedEx and Formula 1, achieved a 2000% return on investment and an 80% improvement in customer service response times through AI, respectively, showcasing the effectiveness of its software and strong market demand.
- Financial Health Status: With total debt at $11.6 billion and net cash at $7.2 billion, Salesforce's 78% gross margin and 22% operating margin indicate robust profitability, suggesting that its debt levels are manageable and future growth remains promising.
- Valuation and Market Outlook: Currently, Salesforce's P/E ratio stands at 34.7, lower than Microsoft and Oracle, suggesting its stock is undervalued; following market corrections, a rebound is anticipated in 2026, reflecting its fundamentally strong position.
See More
Asia-Pacific Markets Decline Amid Tech Stock Sell-Off
- Japanese Market Decline: The Nikkei 225 fell by 1.2% and the Topix declined by 0.39%, reflecting investor concerns over the sell-off in U.S. tech stocks, which may increase pressure on Japanese export companies.
- Australian Market Slightly Lower: The S&P/ASX 200 index dropped by 0.22%, indicating uncertainty in the market regarding global economic prospects, particularly in light of poor tech stock performance.
- Mixed Performance in South Korea: While the Kospi index rose by 0.4% and the small-cap Kosdaq gained 1.01%, overall market sentiment remains influenced by fluctuations in the U.S. market, showcasing investor caution.
- Hong Kong Hang Seng Futures Decline: Hang Seng index futures were at 26,590, lower than the benchmark's 26,834.77, suggesting a lack of confidence in future economic recovery, which may affect investor decisions.
See More
US Stocks Close Lower as Tech Sector Retreats
- Market Decline: The S&P 500 index fell by 0.84%, the Dow Jones by 0.34%, and the Nasdaq 100 by 1.55%, indicating a sharp sell-off after reaching record highs, which negatively impacted investor sentiment.
- Tech Sector Retreat: Data service and software stocks plummeted following the release of an automation tool by AI firm Anthropic, with Thomson Reuters and EPAM Systems down over 15% and 13% respectively, reflecting a loss of confidence in tech stocks.
- Precious Metals Rally: Gold prices surged over 6% and silver over 8%, leading to gains in mining stocks, with Hecla Mining and Freeport McMoRan rising more than 8% and 6% respectively, indicating increased demand for safe-haven assets.
- Economic Outlook Improvement: Richmond Fed President noted an improving US economic outlook despite ongoing risks, with markets focusing on upcoming economic data and the passage of a spending bill to gauge future economic trends.
See More
Software Stocks Face Increased Selling Risks Amid AI Concerns
- Market Panic Intensifies: Software stocks are facing indiscriminate selling due to fears of AI-driven disruptions, with companies like ServiceNow, Salesforce, and Intuit experiencing significant declines of 28%, 26%, and 34% year-to-date, respectively.
- Cautious Investor Sentiment: Cramer notes that while software companies' profits have not collapsed, Wall Street's concerns about their future have led to a shrinking price-to-earnings ratio, creating challenges for investors in an uncertain market environment.
- Sector Rotation Phenomenon: Some investors have shifted towards sectors heavily reliant on software, such as banks and industrials, but the price increases in these stocks have limited new investment opportunities, highlighting the importance of selectivity in the current market.
- Winners and Losers Divergence: Cramer suggests that market logic indicates users (like banks and consumer goods companies) will emerge as winners, while software providers face pressure, although the market is not always rational, which may impact investment strategies.
See More
Software Stocks Have Taken a Hit, and This Chart Indicates It's Not the Right Moment to Invest.
- Software Stocks Performance: Software stocks have experienced a poor start to the year, indicating a challenging market environment.
- Technical Indicators: Current technical indicators suggest that there may not be an immediate recovery for these stocks.
See More
AI Panic Strikes Market as Software and Legal Services Suffer Major Setbacks.
- AI's Impact on Stock Market: The anticipated positive influence of artificial intelligence on the stock market has not materialized as expected.
- Market Performance: Despite initial optimism, stock market performance has been lackluster, raising questions about the actual benefits of AI in trading.
- Investor Sentiment: Investor confidence appears to be wavering as the promised AI-driven gains fail to materialize.
- Future Outlook: Analysts are reconsidering the role of AI in financial markets, suggesting a more cautious approach moving forward.
See More
