Salesforce Stock Falls to Lowest-Ever Valuation Despite Strong Q3 Earnings

The valuation of Salesforce stocks has dropped as low as it was decades ago, with forward price-to-earnings ratio standing at 19 compared with the 10-year average ratio of 47 at Salesforce and 22 at the S&P 500. 

This drop is in line with increased investor doubts over the development of artificial intelligence. 

As of 2025, share price of the company had dropped approximately 30%, making Salesforce one of the weakest stocks in the S&P 500. 

Technology companies that invested intensively in AI, including Microsoft and Palantir, had a better payoff, in contrast. 

Irrespective of this movement, the future earnings announcement which would take place in the post-market session on December 3rd and seems to promise a recovery. Senior research analyst at ClearBridge Investments Hilary Frisch said:

“We need a change in sentiment for investors to take a look, and that will be driven by stability and an improvement in topline growth,”

Profits dominate Glee

The Salesforce outperformed market expectations in quarter three of the FY2026 period with a revenue of $10.26 billion, a year-over-year growth of 8.6% and adjusted earnings-per-share of $3.25 compared to the forecasted market expectations of revenue of $10.27 billion and earnings-per-share of $2.86.

Chair and CEO, Salesforce, Marc Benioff said

“We are raising fiscal year 2026 revenue guidance to $41.45 billion to $41.55 billion, and Q3 cRPO was exceptional, up 11% year-over-year at $29.4 billion, signaling a powerful pipeline of future revenue,”

AI Disruption Weighs Heavy

In the same Software-as-a-Service industry, fellow industry players have also been meeting undesirable market responses; a Morgan Stanley index that follows the industry fell by 12% in 2025 due to the so-called agentic AI as a threat to subscription stability. 

Interestingly, while concerns about AI’s impact remain, the earnings growth for Salesforce is anticipated to rise by 11% this fiscal year, with an 8.8% increase in revenue. 

Projections indicate both metrics could gain further momentum in subsequent fiscal years, with net income potentially rising by 20% by 2029.

Salesforce CEO Marc Benioff called Agentforce the third wave of AI advancing beyond copilots to a new era of highly accurate, low-hallucination intelligent agents that actively drive customer success.

Players on the market have been conservative with regard to future expectations of fiscal year 2026 projections with future wider use of the platform across the company in terms of products.

Valuation Signal Opportunity

Salesforce has a market capitalization of as of December 03, 2025 is $223.44B, down from 2004, at a trading price of $230. 

Hilary Frisch, senior analyst at ClearBridge Investments, believes that negative investor sentiment towards Salesforce may change signs of stabilization and recovery of the company’s business growth rate.

Bright Days Ahead

The projected revenue in the FY2026 will be in the range of $41.45 – 41.55 billion that reflects a growth rate of 11%. 

Salesforce can be supported as critical infrastructure in the changing AI context through both strategic extensions of the Agent force product into Slack and voice-technology systems and the $8 billion investment in acquiring Informatica. 

As long as competitive disruption remains an issue, the long-term upward trend and prices (30-40% below estimated fundamentals) indicate that a market overreaction can be negated in the near future, and therefore investors can be reinspired with confidence.