Salesforce Beats on Earnings and Touts AI Agents at $1.2 Billion — But Can Agentforce Outrun the Threat to Its Own Business Model?

Shares surged 6.5% to $187.60 on May 29 as investors digested Salesforce's first-quarter fiscal 2027 report, which delivered a clean beat on both revenue and profit while showcasing rapid growth in its AI agent platform. The rally claws back part of a brutal 32% year-to-date decline driven by fears that AI could undermine the per-seat software licensing model that built the company's $41.5 billion revenue base.

The Numbers Were Hard to Argue With. Revenue hit $11.13 billion, topping Wall Street's $11.05 billion consensus, while non-GAAP earnings per share came in at $3.88 — crushing the $3.12 estimate by nearly 24%.

Non-GAAP operating margin reached a record 34.8%, expanding 250 basis points year over year.

The company returned $27.5 billion to shareholders in Q1, including a $25 billion accelerated buyback that delivered 103 million shares upfront — a move that mechanically inflates future EPS even if revenue growth slows.

AI Agent Revenue Is Growing Fast — From a Tiny Base. Agentforce annual recurring revenue (the yearly value of active subscriptions) reached $1.2 billion, up 205% year over year. That sounds explosive, but $800 million last quarter represented less than 2% of Salesforce's total annual revenue. At $1.2 billion, it is still a small fraction. The critical question is whether this product — which charges companies per task completed by AI rather than per employee using the software — can scale fast enough to replace the revenue at risk from shrinking seat counts.

Existing Customers Are Buying More, Not Less. More than 50% of AI-related bookings came from existing Salesforce customers, and those customers are buying Agentforce on top of their current licenses, not as a replacement. That directly contradicts Bank of America's May 18 downgrade to Underperform with a $160 target, which framed the shift as an "AI-driven structural reset."

Next Quarter's Guidance Tempers the Optimism. Contracted future revenue growth slowed to 14% from 16% last quarter, and Q2 revenue guidance of $11.27–$11.35 billion fell slightly below expectations.

Post-earnings, Bernstein cut its target to $173, Baird to $225, and Wells Fargo to $200 — a split verdict that mirrors the stock's fundamental tension: record profits today versus an uncertain pricing model tomorrow. The consensus target of $258 still implies roughly 42% upside , but only if Agentforce can prove it is a new revenue engine, not just a hedge against the old one breaking down.