Salesforce (CRM) is back in focus after the U.S. Department of Veterans Affairs awarded the company a three year Agentic Enterprise License Agreement worth up to US$1.6b through its distribution network.

Despite the VA agreement highlighting Salesforce’s role in government and healthcare, the stock has been under pressure, with the share price down 28.75% year to date and the 1 year total shareholder return down 29.45%. The recent 7 day share price return of 15.15% suggests short term momentum has picked up after a 4.07% decline in the latest session.

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Bulls point to Salesforce’s VA win, AI products and margin profile. Bears focus on the share price slide and questions around core growth and AI monetisation. Which side does the current valuation support?

Most Popular Narrative: 29.4% Undervalued

According to the most followed narrative on Salesforce, a fair value of $255.90 sits well above the last close at $180.71, which frames the recent VA contract in a very different light.

The per-seat licence was only ever the toll booth. The asset is the governed system of record: every customer, every deal, every entitlement, for about 80% of the Fortune 500. And the one thing an autonomous AI agent cannot do is act on a customer without getting into that record first. An agent with no permissions, no governance and no audit trail is not an asset, it is a liability waiting to happen. So the same automation wave that threatens the seat count is exactly what drives every serious enterprise deeper into the data layer Salesforce owns. The meter changes from per-person to per-action. It does not disappear.

Curious what underpins a fair value well above Salesforce’s current price? The narrative leans heavily on recurring revenue, disciplined margins and a re-rated profit multiple. The exact revenue path, margin profile and cash flow bridge are all laid out there, but not here.

Result: Fair Value of $255.90 (UNDERVALUED)

However, Salesforce still faces real risks if AI agents reduce seat based revenue faster than Agentforce scales, or if competitors such as Microsoft tighten their grip inside large enterprises.

Next Steps

With the mix of optimism and concern around Salesforce clear, this is a moment to review the numbers for yourself and move quickly. To see both the key risks investors are watching and the rewards they are excited about, take a look at the 4 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.