By Adam Levine

Salesforce stock is sliding as investors weigh better-than-expected financial results against concern that the company is turning to acquisitions, rather than innovation, as a source of growth,

Adjusted earnings per share, disclosed late Wednesday, were $2.58 versus the consensus forecast of $2.55 among analysts tracked by FactSet, and up from $2.44 last year. Revenue for the quarter reached $9.83 billion, above expectations for $9.75 billion, and up 7.6% on the year.

Salesforce also gave strong guidance for the second quarter, with forecasts higher than Wall Street expected, and increased its outlook for fiscal 2026.

That combination lifted the stock in after-hours trading, but Salesforce also announced its intent to buy Informatica, a company that provides data management and integration services, which will support Salesforce's artificial intelligence play, Agentforce. Agents, software that uses language models to automate a series of tasks from a simple prompt, need company data that is clean and ready.

"Bringing Informatica in helps complete the data picture for a lot of our enterprise customers, stitching the broader set of data together," Salesforce Executive Vice President of Investor Relations Mike Spencer told Barron's. "It helps stitch non-Salesforce data together in a much tighter fashion so that the agent answering questions of the employee or the customer is more accurate and complete because the data set underneath is more tightly bound together."

RBC Capital Markets analyst Rishi Jaluria dramatically lowered his Salesforce price target from $420 to $275 in the wake of the first quarter. "While Salesforce has always been a major acquirer, expanding its platform and footprint meaningfully, more recent acquisitions (MuleSoft, Tableau, Slack) have a mixed track record without full integration," he said in a Thursday note to clients. "While it has been nearly four-and-a-half years since the controversial acquisition of Slack was announced and Salesforce had avoided large acquisitions since then (partly due to the involvement of multiple activist investors), we now worry Salesforce may be back to acquiring versus innovating organically."

Salesforce stock was down 7% in early trading on Thursday morning. It is on pace for largest percent decline since May 30, 2024, when it fell 20%.

Jaluria downgraded Salesforce to Sector Perform from Outperform.

Salesforce says the merger will add to profits beginning in the second year after the deal closes.

Write to Adam Levine at adam.levine@barrons.com

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May 29, 2025 11:04 ET (15:04 GMT)

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