Salesforce Downgraded by Bernstein on Weak AI Product Feedback

Bernstein downgraded Salesforce (NYSE: CRM) to Sector Weight from Outperform on Thursday, removing its price target for the stock. The investment firm cited weak customer feedback and a lack of tangible momentum for the company's Agentforce artificial intelligence product as key drivers for the ratings change.

The Rationale Behind the Downgrade

In a note to clients, Bernstein analyst Jackson Ader stated that the firm's recent checks and customer conversations have not been strong. He noted that disclosed figures have not signaled building momentum for Agentforce and that a recent CIO survey showed Salesforce "being a standout for the wrong reasons."

According to the note, a greater number of CIOs surveyed by Bernstein expect to deprioritize spending on Salesforce in their IT budgets over the next 12 months than those who plan to increase it. This sentiment suggests that any significant growth acceleration from AI initiatives "is further out than we'd expected, if it plays out at all," the firm wrote.

Customer Feedback and Product Readiness

Bernstein's analysis highlighted two consistent points of negative feedback from customers regarding the company's AI push. This feedback points to significant hurdles for adoption in the near term.

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• Customers reported that their own data is often not organized enough to be used for meaningful AI work.
• The Agentforce product itself "just isn't there" in terms of readiness and functionality, according to the customer feedback gathered by the firm.

Valuation and Financial Scrutiny

Beyond product concerns, Bernstein also pointed to the company's valuation. While Salesforce's valuation multiple is low based on its own historical levels, the firm said it now sits near the median compared with its peers and is valued above peers on a growth-adjusted basis.

Furthermore, Bernstein noted it has struggled to find evidence in Salesforce's financial disclosures to support management's commentary that net-new average order value (AOV) is growing faster than overall AOV. This indicates a disconnect between the company's narrative and the verifiable financial data.