Salesforce reported record sales for the first quarter of fiscal year 2026 and raised its guidance for the next quarter as it steps up acquisitions to build a unified enterprise AI platform. However, Wall Street has grown skeptical of this strategy, which has yet to demonstrate that it is a more effective way to allocate capital in pursuit of new business opportunities.
Earnings per share were $2.56, up from $2.44 last year, also slightly beating market estimates.
Management applauded the company’s steady revenue and earnings growth, as well as the recent acquisition of another company that could accelerate its entry into the enterprise AI market.
“We delivered strong [first-quarter] results and are raising our guidance by $400 million to $41.3 billion at the high end of the range,” Marc Benioff, chair and CEO of Salesforce, said in a statement.
He said the company has built a “deeply unified enterprise AI platform,” with agents, data, apps, and a metadata platform “that is unmatched in the industry.”
Robin Washington, president and chief operating and financial officer at Salesforce, attributed the company’s first-quarter performance to the solid execution of its business strategy, driven by a focus on innovation, operational excellence, and maximizing customer and shareholder value.
During its earnings conference call, management provided further insight into the company’s business strategy and the recent announcement to acquire Informatica—a leading software company specializing in data integration, data management, and cloud data services—for $8 billion.
“It’s an awesome acquisition for us,” Benioff said. “It’s a transformational step; it’s an excellent price for the company.”
Washington added, “This will be a critical complementary asset for accelerating our growth strategy in data and AI and apps.”
“We are laser-focused on the speed of integration,” she said. “By leveraging our focus on operational excellence and our M&A integration playbook, our goal is to achieve accretion as quickly as possible, which is a significant evolution in our M&A strategy, and in-line with recent acquisitions.”
Over its more than two and a half decades of history, Salesforce’s management has relied on acquiring a couple dozen technology companies for growth, including Tableau in 2019 and Slack in 2021.
Initially, this fast-track strategy drew the attention of the Wall Street investors, who chased after the shares of fast-growing companies, hoping that strong sales would result in superior capital returns.
As a result, Salesforce’s momentum on Wall Street has stalled recently, with its shares underperforming the broader market both year to date and over the past five years. As of 1:52 p.m. ET on May 29, the first trading day after the company reported, its stock had fallen 5.31 percent on the New York Stock Exchange.
A key reason for Salesforce’s capital allocation issue is that it must overpay to acquire new companies. For instance, it paid $27.7 billion for Slack in 2021, almost twice what it paid for Tableau two years earlier, and four times what it paid for MuleSoft three years earlier.This strategy is similar to that employed by the “old GE,” which grew steadily in the 1990s and early 2000s through an acquisition spree, often overpaying for acquisition targets. Such a strategy ultimately transfers value from the stockholders of the acquirer to those of the acquired company.
That’s why the shares of “old GE” underperformed the broader market before the company split into three separate entities in 2024.
Still, Salesforce’s management remains optimistic about the future.
“We’re starting [fiscal year 2026] strong with a trusted, deeply unified platform, the most technical leadership team in our history, and a solid foundation to accelerate efficiency and growth,” Washington said.
“We truly have a once-in-a-lifetime opportunity to lead our customers in this digital labor revolution with Data Cloud, Agentforce, and our Customer 360 apps, all deeply unified within our metadata platform.”
