CRM's AI and Data Cloud ARR Surges 120%: Can the Momentum Continue?

Salesforce, Inc. CRM posted strong results in its AI and Data Cloud businesses. In the second quarter of fiscal 2026, the company's Annual Recurring Revenue (ARR) from AI and Data Cloud reached $1.2 billion, up 120% from last year. During the second-quarter earnings call, management noted that data and AI products are often sold together and are now becoming a core part of Salesforce’s growth plan.Salesforce’s Data Cloud business is playing a key role, which is now a $7 billion business. Customers grew 140% year over year, and data usage rose 326% in the second quarter. More than half of the Fortune 500 companies already use Data Cloud. Additionally, the company is seeing customers expand usage as AI adoption accelerates. FedEx, for example, is using the data cloud platform to unify its data and reported double-digit gains in shipping contract conversions.Agentforce, Salesforce’s AI agent platform, is also growing. The company has signed more than 6,000 paid deals. About 40% of bookings in the second quarter came from existing customers expanding their use. Moreover, management noted a 60% rise in customers moving from pilot projects to full production. Additionally, Salesforce’s newly introduced pricing model, called flex credits, which provides flexible payment options, is already making up about 80% of Agentforce bookings. This model has the potential to scale recurring revenues over time, aiding in Salesforce’s top-line growth.Moreover, the combination of Data Cloud and Agentforce acts as the base of the Agentic Enterprise, where accurate data supports AI agents to deliver better outcomes. These factors can help Salesforce to keep up this strong growth and turn early adoption into steady, long-term gains. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of 8.8% and 9.1%, respectively.How Competitors Fare Against CRMMicrosoft Corporation MSFT and ServiceNow, Inc. NOW are also pushing AI automation in the enterprise market.Microsoft has integrated strong AI features into its Dynamics 365 platform through its Copilot tools, simplifying tasks, such as writing emails, creating reports and summarizing meetings for users. Since many companies already use Microsoft products, integrating Copilot into their existing workflows is simple and cost-effective.ServiceNow’s Now Assist platform uses AI to automate IT service management, customer support and human resource management tasks. ServiceNow has been rolling out industry-specific AI tools, similar to what Salesforce is doing with Agentforce.Salesforce’s Price Performance, Valuation and EstimatesShares of Salesforce have plunged 25.4% year to date against the Zacks Computer – Software industry’s growth of 22%.Salesforce YTD Price Return PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, CRM trades at a forward price-to-earnings ratio of 20.48, significantly below the industry’s average of 33.89.Salesforce Forward 12-Month P/E RatioImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Salesforce’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 11.2% and 11.7%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward in the past 30 days.Image Source: Zacks Investment ResearchSalesforce currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Salesforce Inc. (CRM): Free Stock Analysis Report ServiceNow, Inc. (NOW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks