Bank of America double upgraded Salesforce to buy from sell and raised its price target to $285 from $160. Analysts said they had overstated the AI disruption risk for the software company. The shares are up from their June low but remain down for the year.
Bank of America double upgraded Salesforce to buy from sell, and the stock rose roughly 1.5% in Monday's session. The firm's analysts acknowledged they previously overstated the AI disruption risks for an established company like Salesforce.
The bank's new price target is $285 a share, up from $160. BofA analysts said they now believe the enterprise software company has a credible AI strategy and can use the technology to drive more spending on its platform.
Why the bank changed its view
For a large part of the year, fears that AI would upend the seat-based business model of most software-as-a-service companies crushed Salesforce's stock. Investors also worried that clients would use AI to build in-house applications that replace Salesforce tools.
BofA's analysts now say otherwise, partly based on conversations with chief information officers. They wrote that large enterprises are unlikely to replace platforms that house their business logic, data, workflows and compliance frameworks, and that AI should deepen dependence on them. They also wrote that Salesforce offers one of the most comprehensive approaches to enterprise AI adoption.
According to CNBC Investing Club's Jim Cramer: "Salesforce was not falling apart, and it was the wrong call," he said on Monday's Morning Meeting.
Shares recover but remain below earlier levels
Salesforce reported better-than-expected fiscal 2027 second-quarter results in late August and unveiled a partnership with Anthropic called "Claudeforce." Shares are now up more than 50% from their 52-week closing low of roughly $150 in late June.
The rebound has lost some momentum, however. The stock closed at roughly $264 on Sept. 3 and remains down about 12% year to date.
Salesforce still has work to do with Wall Street: nearly one-third of analysts maintain hold-equivalent ratings on the stock.
Source: CNBC Investing Club
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