Salesforce Q2 Earnings Beat Lifts CRM 21% — and UBS Finds No Evidence of AI Displacement
Salesforce Q2 earnings cleared a bar that Wall Street had quietly lowered, and the stock responded with force — CRM climbed roughly 21% Thursday to trade near $250. Yet the most consequential line of the day came from UBS analyst Karl Keirstead, who buried it near the end of his note: Salesforce’s numbers show no strong evidence that AI is displacing enterprise software at all.
Key Points
- Guidance: Salesforce raised full-year revenue guidance late Wednesday after a fiscal Q2 beat
- Stock: CRM +21% intraday, near $250 — yet still down 6.1% year to date
- UBS price target: Raised to $240 from $210; rating held at neutral
- The bookings signal: “Exceptional” Q2 bookings and near-record-low attrition drove the cRPO beat
- The durable signal: Contract lengths are increasing across all segments
- The thesis shift: UBS sees “no strong evidence of AI displacement,” arguing apps “may be a more resilient category than thought”
What Salesforce Actually Reported
Salesforce lifted its full-year revenue outlook on Wednesday evening after beating on the fiscal second quarter. Chief Financial and Operating Officer Robin Washington pointed analysts toward the underlying drivers rather than the headline figure.
“Exceptional [second-quarter] bookings, along with near-record low attrition drove our [second-quarter current remaining performance obligation] beat,” Washington said on the earnings call.
She then reaffirmed the commitment that mattered most to investors: the company remains on track for organic revenue reacceleration in the second half. Moreover, she added a detail that carries further than one quarter — “contract length terms for new business and renewals are increasing across all segments.” Customers, in other words, are signing longer, not hedging shorter.
Why the Reaffirmation Moved the Stock
Expectations had drifted low enough that simply holding the line counted as a win. Keirstead made that explicit.
“[Wall] Street sentiment had turned fairly cautious on concerns that Salesforce might walk-back its [second-half] acceleration guide given weak CRM software demand signals,” he wrote. Against that setup, the reaffirmation may be “good enough.”
UBS accordingly raised its price target to $240 from $210. Nevertheless, the firm stayed neutral. “While this print was better than feared, we’re comfortable staying patient and remaining neutral-rated until we have more visibility into the magnitude of the [second-half/2027] acceleration, as well as greater confidence in Salesforce’s AI suite,” Keirstead said.
The Bigger Read: Software Is Not Being Eaten Yet
The Salesforce Q2 earnings report doubles as a test case for the year’s loudest bear thesis — that AI agents will hollow out the application layer and strand incumbents like Salesforce with shrinking seat counts.
Keirstead’s read pushes back directly. “Salesforce’s growth metrics are very mixed, but do not show strong evidence of AI displacement, bolstering the growing view that apps may be a more resilient category than thought,” he wrote. He further argued that the reported collaboration between Anthropic and Salesforce on a Claude-based product “serves to de risk the sector,” reframing AI as a partner to enterprise software rather than its replacement.
That framing matters well beyond one ticker. Investors spent this week rewarding AI infrastructure — Nvidia (NASDAQ: NVDA) rallied on blowout results — while punishing application-layer incumbents such as Alphabet (NASDAQ: GOOGL), down $692 billion in market value since May. Salesforce now offers the first real counterweight.
One caveat keeps the enthusiasm honest, however. Despite Thursday’s 21% surge, CRM remains down 6.1% for the year. Relief is not the same as re-rating, and UBS is still waiting for proof before it upgrades.
