KeyBanc downgraded Salesforce shares, citing doubts about the company's AI narrative

KeyBanc just ended its bullish Salesforce call.

Salesforce's stock may have a cheap valuation working in its favor, but that's about it, according to a KeyBanc Capital Markets analyst.

Jackson Ader cut his rating on Salesforce shares (CRM) to sector weight from overweight, writing that he saw "little to no evidence, other than the valuation multiple, that the stock lends itself to a bullish recommendation, "and when that's the case, we think it's time to step back."

Even when looking at stock multiples, Salesforce's is "low" but not "bottom of the barrel" for the software sector, according to Ader. Shares look cheap "on a historical basis but at or around the median compared to peers and even above peers on a growth-adjusted basis," he noted.

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Ader pointed to an enterprise-value to free-cash-flow multiple that's almost 80% below its post-2020 peak and below where peer stocks trade. Add the growth variable to the mix, however, "and believe it or not, these peers have seen their post-2020 multiples compress by even more."

He acknowledged the downgrade isn't exactly well-timed. Salesforce shares have already dropped 37% this year as investors have worried about the company's growth trends and its positioning in the artificial-intelligence era. "Hoping it's a better-late-than-never situation," Ader wrote of the decision to abandon his bullish call now.

Shares are off more than 4% in premarket action on Thursday.

After attending events with Salesforce partners and customers, Ader is left with the impression that client data isn't currently in the sort of "order" that would allow for significant AI work to take place. Furthermore, he thinks Salesforce's Agentforce AI offering "just isn't there" as a product.

"Partners we speak with are just now beginning to convert Agentforce proof of concepts into deals in the pipeline, and more CIOs in our survey expect to deprioritize Salesforce within their IT budget than the other way around over the coming 12 months," he wrote, referring to chief information officers.

The company may be able to drive some acceleration in its business, but that dynamic has been "well-telegraphed" by now - and it might not even be enough, according to Ader. "Larger or longer acceleration is needed to deliver upside, and that, it seems, will be hard to come by in 2026," he wrote.

Salesforce didn't immediately respond to a MarketWatch request for comment.

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-Emily Bary

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July 09, 2026 08:43 ET (12:43 GMT)

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