During the corporate growth boom triggered by the 2020 pandemic, Salesforce.com (CRM.US) once achieved a market cap that exceeded Oracle (ORCL.US). At that time, Marc Benioff finally defeated his mentor Larry Ellison. However, those glory days are long gone.

Since the beginning of this year, Salesforce.com's stock has fallen 25% cumulatively, posting the worst performance among large tech stocks and becoming the second-largest decliner among Dow Jones components, only outperforming UnitedHealth (UNH.US). In stark contrast, Oracle's stock surged 34% over the same period, not only outperforming most peers but also significantly exceeding major indices. The two companies, once comparable in valuation, now have a market cap gap of approximately $400 billion. Currently, Oracle's market cap stands at $630 billion, while Salesforce.com has dropped to $239 billion.

On the Bloomberg Billionaires Index, Ellison ranks second with a net worth of $278 billion (behind only Musk), while Benioff ranks 318th with $10.4 billion. On Wednesday after market close, Salesforce.com will release its quarterly earnings, with investors eagerly hoping to find specific turnaround plans from Benioff's statements.

Due to saturation challenges in the core customer relationship management (CRM) software market, Salesforce.com's sales have been stuck in single-digit growth for four consecutive quarters. According to LSEG data, analysts expect this trend to continue, with revenue growth projected at 8.7% for this quarter, reaching approximately $10.1 billion.

In the quarter ending in April this year, about one-quarter of Salesforce.com's $9.3 billion in subscription and support revenue came from customer service-related products—its largest business segment. Its Service Cloud product charges based on the number of customer service representatives using the software. With the rapid rise of artificial intelligence (AI) technology, some analysts predict that more customer inquiries will be handled through automation in the future, undoubtedly presenting potential risks for Salesforce.com.

Benioff is well aware of this challenge. He stated in June this year that approximately 30% to 50% of the company's work is now completed by AI. This is reportedly one of the important reasons why Salesforce.com laid off 1,000 employees earlier this year.

On the customer-facing side, Salesforce.com has launched Agentforce, an AI customer service system for handling customer support requests. Benioff revealed during a May analyst call that since the product's launch in October last year, it has achieved $100 million in annualized revenue.

"Considering Salesforce.com's business scale, $100 million in revenue has minimal impact on overall performance," said Wells Fargo analyst Michael Turrin, who currently rates Salesforce.com stock as "Hold." Turrin noted that investor expectations center on customers eventually paying more for Agentforce than for Service Cloud.

Oracle's core advantage lies in being one of the early beneficiaries of the AI boom. Although Oracle is known for database software serving large enterprises and government agencies, the company has secured cloud infrastructure commitments from OpenAI and Musk's xAI.

For Salesforce.com, if it can drive market acceptance of Agentforce, this product could become its key breakthrough into the AI business. "I think investors are quite dissatisfied with Salesforce.com's stock performance, and everyone is now judging whether the company has any chance of a modest rebound," Turrin said.

Investors are also focusing on whether "current remaining performance obligations at constant currency" (a metric measuring expected revenue for the next year) can improve. In May this year, Salesforce.com Chief Operating Officer Robin Washington stated that this metric was expected to reach 9% for the quarter ending in August.

Turrin explained: "The longer this metric stays above 10%, the more confident investors become that the company can maintain at least 10% growth for the next year." According to LSEG data, analysts expect Salesforce.com's revenue growth to recover slightly in the third quarter of next fiscal year, with current consensus expectations at 9%.

Salesforce.com declined to comment on this matter.

Salesforce.com's growth may also come from external acquisitions. In May this year, the company announced an $8 billion acquisition of data management company Informatica (INFA.US). This is Salesforce.com's largest deal since acquiring Slack for $27.1 billion in 2021. During this period, Salesforce.com's single acquisition spending never exceeded $2.5 billion—while M&A was once an important growth engine for the company in past years.

By the end of 2022, activist investors began targeting Salesforce.com, expressing dissatisfaction with Benioff-led high-cost acquisitions, poor stock performance, and workforce expansion. They demanded optimization of revenue and profit structure, prompting Salesforce.com to achieve profit margin improvement targets ahead of schedule.

Key driver Starboard Value recently increased its position again. Documents show that this company, which first purchased Salesforce.com stock in 2022, increased its holdings by 47% in the second quarter of this year. In October 2024, Starboard founder Jeff Smith, while acknowledging Salesforce.com's progress in profitability, still stated that "the company still has significant room for improvement."

Conversely, Vulcan Value Partners, which holds Salesforce.com stock, remains optimistic about the software giant's strategic deployment. The firm first bought Salesforce.com stock in 2020 and added 345,000 shares in the second quarter of this year, bringing its total position value to $300 million.

"Our core focus is the company's per-share value," said Stephen Simmons, portfolio manager at the company. "This metric continues to grow, and there are no signs that this company will decline in the short term."

According to LSEG data, analysts expect Salesforce.com's earnings per share this quarter to rise from $2.56 in the same period last year to $2.78.

Notably, Vulcan sold its Oracle holdings in 2020, missing the subsequent significant gains in that stock. Simmons stated that if Oracle's stock price trades at a discount in the future, he would be willing to buy again.

"The cyclical nature of things is wonderfully unpredictable," Simmons reflected. "When Benioff founded cloud-native enterprise Salesforce.com, Ellison was still struggling at Oracle to migrate on-premise customers to the cloud."