The cloud software giant still hasn't joined the four-comma club ... yet.
Salesforce (CRM 0.16%) is one of the world's largest cloud software companies, but it's still much smaller (as measured by market cap) than Amazon, Microsoft, and Alphabet -- which all saw their market caps cross the trillion-dollar mark in recent years. Valued at $280 billion, Salesforce would still need to nearly quadruple its market cap to join the four-comma club.
That might sound like a lofty goal, but Salesforce was only worth $28 billion 10 years ago. Let's review its growth rates, long-term catalysts, and valuations to see if it has a shot at becoming a trillion-dollar company by the end of the decade.
Image source: Getty Images.
How fast did Salesforce grow over the past decade?
Salesforce is the world's largest provider of cloud-based customer relationship management (CRM) services. It capitalized on the growth of its core business to expand its ecosystem with additional cloud-based e-commerce, marketing, analytics, data visualization, and enterprise collaboration services. The company locked in those clients with sticky subscriptions.
From fiscal 2014 to fiscal 2024 (which ended this January), Salesforce's revenue grew at a compound annual growth rate (CAGR) of 24%. A lot of that growth was organic, but it also made some big acquisitions -- including Demandware, Mulesoft, Tableau, and Slack -- to expand its ecosystem.
Salesforce turned profitable on a generally accepted accounting principles (GAAP) basis in fiscal 2017. Its profitability has been lumpy, but its annual GAAP net income still increased at a CAGR of 44% from fiscal 2017 to fiscal 2024. It also declared its first-ever dividend earlier this year and boosted its buyback authorization by $10 billion.
Salesforce could struggle to maintain those growth rates
However, tech companies usually don't start paying dividends or initiate multibillion-dollar buybacks unless they're running out of room to grow. That's what happened to Salesforce over the past two years.
As the table illustrates, four of its five main cloud platforms (Sales, Service, Platform & Other, Marketing & Commerce, and Integration & Analytics) experienced significant growth slowdowns in fiscal 2024.
Revenue Growth by Segment | FY 2023 | FY 2024 |
|---|
Sales | 19% | 11% |
Service | 18% | 12% |
Platform & Other | 36% | 11% |
Marketing & Commerce | 21% | 9% |
Integration & Analytics | 16% | 20% |
| Total | 22% | 11% |
Data source: Salesforce. Constant currency terms.
Salesforce's growth decelerated as the macro headwinds drove many companies to rein in their cloud software spending. It also faced tougher competition from faster-growing CRM platforms like Microsoft's Dynamics CRM. Activist investors also pressured the company to cut costs and pause its big acquisitions.
Salesforce expects its revenue to only rise 8%-9% in fiscal 2025. Analysts expect its revenue to grow at a CAGR of 10% from fiscal 2024 to fiscal 2027. That deceleration is disappointing, but Salesforce has been aggressively cutting costs and buying back more shares to grow its earnings per share (EPS) instead. That's why analysts expect its EPS to increase at a CAGR of 28% from fiscal 2024 to fiscal 2027.
How much could Salesforce be worth in 2030?
If Salesforce matches Wall Street's estimates and continues to grow its EPS at a CAGR of 20% from fiscal 2027 to fiscal 2030, it could generate a GAAP profit of $15.20 per share by the final year. With a price-to-earnings ratio of 30, its stock would be trading at about $460 -- which would represent a 60% gain and lift its market cap to about $450 billion. Even if it's trading at a more generous 50 times earnings, its stock price would only reach $760 per share, with a market cap of $740 billion.
Therefore, it seems unlikely that Salesforce will join Microsoft, Amazon, and Alphabet in the trillion-dollar club by the end of the decade. So instead of focusing on its market cap, investors should see if Salesforce can consistently grow its margins and earnings without accidentally eroding its defenses against its smaller cloud software competitors.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Salesforce. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
FAQs
Even if it's trading at a more generous 50 times earnings, its stock price would only reach $760 per share, with a market cap of $740 billion. Therefore, it seems unlikely that Salesforce will join Microsoft, Amazon, and Alphabet in the trillion-dollar club by the end of the decade.
What is the price target for CRM in 2025? ›
Stock Price Prediction for 2025
The overall average recommendation was “outperform”. Based on our assessment of the financials, 24/7 Wall Street projects a somewhat more conservative target price of $302.00.
What is the long term outlook for Salesforce stock? ›
Salesforce / US Dollar Forecast. Current Salesforce (CRM) price $246.12. According to analytical forecasts, the price of CRM may reach $301.29 by the end of 2024, and it is expected to be $586.93 by the end of 2029.
What is the future of Salesforce stock? ›
CRM Stock 12 Month Forecast
Based on 36 Wall Street analysts offering 12 month price targets for Salesforce in the last 3 months. The average price target is $306.83 with a high forecast of $352.00 and a low forecast of $236.00. The average price target represents a 23.88% change from the last price of $247.68.
What is the price target for CRM 12 month? ›
The latest price target for Salesforce (NYSE:CRM) was reported by B of A Securities on September 6, 2024. The analyst firm set a price target for $325.00 expecting CRM to rise to within 12 months (a possible 33.74% upside).
What is the future of CRM in 2030? ›
The customer relationship management (CRM) software market is booming — and it doesn't seem to be slowing down anytime soon. In fact, Fortune Business Insights predicts the global market will nearly double in size, reaching $157 billion by 2030, up from $71 billion in 2023.
What is the forecast for Salesforce in 2030? ›
In FY 2030, we predict Salesforce can hit a stock price of $493.80, a 101.15% increase.
What is the future of Salesforce in 2025? ›
Salesforce as a Game Changer
It's predicted that SaaS CRM solutions will reach a deployment rate of 80 to 85% by 2025. The CRM software market in itself is estimated to grow at a rate of about 14% annually in the short-term, through 2017.
Is Salesforce a good long-term investment? ›
We believe Salesforce is a financially sound company. Revenue is showing solid growth, while margins are expanding rapidly. As of January 2024, Salesforce had $14.2 billion in cash and investments, offset by $9.4 billion in debt, mostly related to the Slack acquisition, resulting in a solid net cash position.
Does Salesforce have good future? ›
So, does Salesforce have a future? With over 150,000 organizations utilizing Salesforce across the world to fuel their growth, it is the most popular and widely used CRM platform confirming the future of Salesforce to be promising.
Top Salesforce Alternatives
- Microsoft.
- Oracle.
- SAP.
- Zoho.
- SugarCRM.
- HubSpot.
- Zendesk.
- Sage.
What percentage of Salesforce (CRM) stock is held by retail investors? According to the latest TipRanks data, approximately 26.48% of Salesforce (CRM) stock is held by retail investors. Who owns the most shares of Salesforce (CRM)? Vanguard owns the most shares of Salesforce (CRM).
Is there a future in Salesforce? ›
Future of salesforce will be shining and great growth. Learn salesforce CRM administration, development and lightning to get a job with good salary. Top 10 institutes for salesforce Training: Trailhead : Basic way to learn for free.
Should I sell my Salesforce stock? ›
Salesforce stock has received a consensus rating of buy. The average rating score is and is based on 70 buy ratings, 28 hold ratings, and 1 sell ratings.
What is the target price for CRM stock in 2025? ›
According to analysts, CRM price target is 306.89 USD with a max estimate of 390.00 USD and a min estimate of 236.00 USD.
How high will Snowflake stock go? ›
SNOW Stock 12 Month Forecast
Based on 31 Wall Street analysts offering 12 month price targets for Snowflake in the last 3 months. The average price target is $176.39 with a high forecast of $220.00 and a low forecast of $125.00.
What are the CRM trends for 2025? ›
The key CRM trends for 2025 include the integration of AI and machine learning, IoT integration, advanced analytics, enhanced mobile capabilities, improved automation, self-service CRM options, industry-specific CRM solutions, comprehensive data integration, and the XaaS model.
What is the target price for Salesforce in 2024? ›
Analysts' Bullish Predictions for Salesforce in 2024
That said, Kash Rangan of Goldman Sachs thinks the rally is set to continue, and has a Street-high target of $345.
What is the projected price of CRM? ›
Stock Price Forecast
| Target | Low | Average |
|---|
| Price | $236 | $304.41 |
| Change | -7.02% | +19.93% |
The global market for Customer Relationship Management (CRM) Software is estimated at US$82.7 Billion in 2023 and is projected to reach US$181.9 Billion by 2030, growing at a CAGR of 10.4% from 2023 to 2030.
