CRM Stock Finds Support as AI Cycle Drives Bullish Outlook

It took a while, but Salesforce's NYSE: CRM ground has been reached, and the stage is set for a strong rebound. The SaaS apocalypse is not happening; Salesforce continues to gain momentum, and its Q1 earnings results reveal that the AI ​​virtuous cycle is gaining momentum.

A positive cycle, driven by the Bullish effect of AI, is visible in the results from NVIDIA NASDAQ: NVDA across the datacenter supply chain and service environment. When companies invest in AI, it makes money and increases the demand for AI.

New consumption equals new demand in the completed cycle. Because we are in the early stages of AI rollout, we can expect this cycle to bolster Salesforce's long-term growth.

Mixed Response Overshadows Bullish Outlook for CRM

Analysts had a mixed response to the Q1 results, with many negative revisions to earnings estimates with confirmed and targeted increases. However, the result was complete, as 39 MarketBeat analysts held a 72% Buy-side bias, and the review was compiled by consensus. While some are pushing to the bottom, many are at a higher level, averaging just $240 below the broad 12-month price target. Consensus takes about 50% away from the key support target, which, coincidentally, corresponds to the lowest analyst target. The new target consensus implies a 35% upside and a five-month high.

The tech stock's price and institutional trend are also in line with a key support target around $160, indicating a high setup in 2019 before the COVID-19 pandemic. Price action has since been volatile, driven by stimulus spending and accelerating digitization, but the stock has continued to show support at this level, as it did in late May. Support is seen in weekly price candles and indicators, showing bears losing control and bulls regaining it.

Institutional trends reveal high ownership and aggressive accumulation. The group owns more than 80% of the stock, has bought the balance for 10 consecutive quarters, and has increased activity as the stock price has fallen. Heavy activity has continued through early Q2 2026, and will likely continue the trend as the year progresses. The stock is trading at a ridiculously low 12X to current year earnings on accelerating growth under the influence of AI. Assuming the forecasts are correct, the company could increase by 200% in the near term and double again in the long run, given the right catalysts.

Salesforce Posts Simple Results, But Against a High Bar

Salesforce's Q1 results and guidance were soft compared to analysts' forecasts, but the bar was set high, and the results were strong. The company's $11.31 billion in revenue increased 13.2% year over year, the fastest both in the quarter and compared to the prior year, the strongest growth of the three. The results were supported by Agentforce, the agent platform, which saw annual recurring revenue grow by more than 200%. Consumption, a key factor, was also strong, rising more than 110% sequentially, and Data 360 held a record 136% increase.

Margin news was also strong. The company reported gains across the board, with adjusted earnings rising 50% year-over-year (YOY) to $3.88, beating consensus by 75 cents. More importantly, guidance was strong, with the company forecasting another strong quarter. Growth is expected to slow to just over 10%, but guidance is likely cautious. The most important detail is that earnings are expected to exceed expectations by a wide margin, and could be a cautious indicator.

Among the things that highlight the strength of the company is its financial position and ability to return capital. The company initiated an accelerated $25 billion repurchase agreement, which is now largely complete. The impact was a 10% YOY decline in the number of shares liquidated, which is expected to have continued capital returns. Dividends are also part of the equation, yielding about 1% in late May, as annual distributions are expected to increase. As it is, the balance sheet remains like a fortress, with sufficient capital and low power, allowing for strategy execution and delivery of results.

Analysts waiting to “see more” from Salesforce's results may be missing the point. The company's primary catalysts are AI integration, margin improvement, and return on investment, and it is being introduced to all three. With this in play, CRM's stock price may struggle to rise, but that's unlikely. The likely result is that the upcoming results turn many strangers into supporters, helping to bolster market sentiment. Until then, the stock may hover near its current lows but is not expected to fall below them.

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