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Morgan Stanley downgraded Salesforce on July 21, lowering its price target to $185 and sending a clear signal: the company’s aggressive AI pivot hasn’t convinced the Street it can actually generate meaningful revenue growth. Salesforce shares dropped roughly 3.6% in premarket trading, and the damage didn’t stop there.
Adobe and Intuit, two other enterprise software heavyweights with their own AI narratives, fell 3.8% and 4.3% respectively.
The AI hype tax comes due
Salesforce has built out its Einstein platform extensively, claiming over 80 billion predictions processed daily. Its newer Agentforce platform, powered by the Atlas Reasoning Engine, deploys autonomous AI agents designed to handle complex business tasks. The company has also touted processing trillions of large language model tokens through its tools.
Those are impressive engineering metrics. Morgan Stanley’s problem is that impressive engineering metrics and impressive revenue metrics are not the same thing.
The analyst report zeroed in on a gap that’s becoming increasingly uncomfortable across the SaaS landscape: companies are spending heavily on AI capabilities, but customers aren’t yet paying proportionally more for those capabilities. Morgan Stanley’s downgrade reflects growing scrutiny of AI deployment ROI timelines across the enterprise software sector, and SaaS providers are being asked to demonstrate clearer pathways to profitability from their AI investments.
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