Morgan Stanley Comments on Salesforce (CRM.US) Investor Day: Stronger AI Narrative, but Evidence for Accelerated Growth Still Lacking; Maintains 'Equal Weight' Rating

According to Odaily, Morgan Stanley released a research report stating that after the Dreamforce Investor Day held by Salesforce (CRM.US), it maintains an "Equal-weight" rating on the stock with a target price of $235. The firm noted that Salesforce did not update its financial guidance at the conference, with its FY2027 outlook and the long-term framework to achieve the "Rule of 50" by FY2030 both remaining unchanged. Management's tone regarding the enterprise acceleration of AI adoption was stronger, but partner research showed that scaled deployments of Agentforce are still at an early stage. The debate over whether Salesforce can achieve organic revenue acceleration in the second half of FY2027, and whether the "SaaSpocalypse" has truly given way to "SaaSceleartion," was not put to rest by the investor event.

It is understood that Dreamforce's "A Day" has historically not been a venue for significant financial updates, and the market had generally expected Salesforce not to adjust its guidance. What is truly worth watching is how management describes the AI monetization path and whether partners provide strong enough cross-validation. Morgan Stanley analysts Adam Wood, Elizabeth Porter, and others noted that Salesforce believes AI will be more substantial and effective in permeating enterprise operations, and the company can monetize through premium version upgrades, consumption billing, and broader platform adoption, thereby continuing the recent momentum in net new Average Order Value (AOV) and supporting organic revenue acceleration from the second half of FY2027 onward. However, the lack of granular financial details on net new additions, combined with partner meetings repeatedly citing high single-digit growth/outlooks, leaves this narrative in the "clear direction, insufficient evidence" stage.

Enterprise "Harness" Becomes the Core of AI Monetization

Morgan Stanley stated that management's description of the AI opportunity is more confident compared to last quarter. CEO Marc Benioff described the current moment as the starting point for an AI-driven enterprise transformation, with Salesforce aiming to be a key beneficiary. The logic is not to provide the strongest model themselves, but rather to offer the so-called "enterprise harness"—while the model offers intelligence, applying that intelligence to specific business contexts requires trusted context, business logic, and governed execution. As management put it, a model may understand the world, but it doesn't understand your business.

In this architecture, Informatica/Data 360 is responsible for preparing and contextualizing enterprise data, Tableau provides business semantics, and Guardian/MuleSoft Agent Fabric handles security, governance, and cost control. Koa, as a CRM-based reasoning model, supplements domain intelligence for multi-step sales and service tasks. Agentforce, through new frontier model integration, Slack Force, and Agentforce Coworker, brings these capabilities into customer workflows. The Max version, costing $550 per user per month and packaging Slack and Slackbot, aims to drive the next upgrade cycle.

Morgan Stanley mentioned that in the past eight quarters, Salesforce accumulated about $1 billion in AOV through premium version upgrades. Spending by upgrade customers increased by 60% to 80%, and after rebundling product spend at renewal, total account Annual Recurring Revenue (ARR) stood at about 1.4 times the original value. Management believes this flexibility supports current net account expansion and also helps reduce future attrition risk. Broader relationship monetization is achieved via ALAs and Salesforce Commit, with ALAs accounting for seven of the top ten deals in Q2. Company account data also provides some support: AI appeared in 80% of the top ARR growth stories, and among the top 100 customers by agent work units, ARR reached about double within 18 months of the Agentforce launch.

Partners: Demand Is Improving, But Not Enough to Drive Overall Growth

Alongside the conference, Morgan Stanley hosted two partner meetings. The feedback was not pessimistic, but also not optimistic. Partners are seeing more Agentforce deployments move beyond the experimental phase, but only a high single-digit percentage of customers have reached scale. Early scaled use cases are concentrated in customer service, where accuracy and labor savings are compelling; flexible credits, outcome-based pricing, and add-on sales for Data Cloud and MuleSoft also provide incremental monetization opportunities.

Competitive pressure is also real. Private AI-native vendors such as Sierra and Decagon remain credible rivals, often converting pilots faster than Salesforce through more flexible pricing, aggressive discounts, and dedicated features. One partner even mentioned that Salesforce won only a few projects in head-to-head evaluations. Salesforce’s strengths still lie in CRM data access, governance, integration, and enterprise-grade workflows, but the risk is that private vendors may steadily take over the engagement layer, relegating Salesforce to a lower-value backend role, especially if customers reduce seat licenses without offsetting the revenue through consumption.

Morgan Stanley said that the initial market interest in headless architectures is seen as a positive signal, because easier access to Salesforce data could improve productivity and accelerate use case creation. However, partners doubt whether such monetization momentum will last: as context engineering improves, models may rely less on the closed metadata advantage of Salesforce, weakening its ability to charge a premium for access. Overall, partner practices are still showing only high single-digit growth, with limited visibility to break above 10%. The main constraints are not a lack of AI innovation at Salesforce, nor massive migrations to competitor platforms by customers, but rather a mature CRM market, already high penetration levels, lengthening decision cycles, and uneven readiness of customer data. Agentforce currently acts more as an incremental positive, rather than a catalyst for transformation across the customer base.

In summary, Morgan Stanley maintains an "Equal-weight" rating on Salesforce with a target price of $235. This target price is based on 12x FY2029 free cash flow per share of about $22, discounted at about 10%, plus $13 per share in net cash. The firm said that in a bull-case scenario, if Agentforce and Data Cloud are rapidly adopted and renewal rates improve, revenue CAGR could reach about 15%, operating margin could rise to about 39% by FY29, and the target price could reach $350; in the base-case scenario, revenue CAGR is about 10% and operating margin about 36%, with a target price of $235; while the bear-case assumes intensifying AI-native competition and legacy drag on growth, with revenue dropping to mid-single-digit growth, corresponding to a 12-month forward valuation of $90.