Salesforce deployed a record $27 billion on share repurchases in the first quarter, combining $25 billion in accelerated buybacks with routine cash-flow-funded purchases. The outlay came as the stock traded near a multi-year low after shedding roughly 60 percent from its early-2025 peak, a decline driven by investor anxiety that generative AI will let companies build custom software instead of renting it.
The debt-for-equity swap
Management financed the accelerated portion with new bonds carrying coupons between 4.5 percent and 6.7 percent. Issuing debt at those rates only makes sense if the internal cost of equity is materially higher. At 14 times forward earnings, a historic discount for the company, the market is pricing in years of stagnation followed by contraction. Benioff is betting the market is wrong.
The AI revenue argument
The optimism rests on Agentforce and Data 360, the two AI services meant to keep customers inside the Salesforce ecosystem. Their combined annualized recurring revenue doubled year over year in the most recent quarter, and the volume of tasks handled by AI agents inside the platform accelerated sequentially. Management says the momentum supports a return to revenue growth in the second half of the year.
Margin trajectory and cash-flow drag
The longer-term model targets an adjusted operating margin of roughly 40 percent by fiscal 2030, up from the mid-30s today. Expanding margins while scaling the AI products is supposed to drive earnings-per-share growth even if top-line gains moderate. The higher interest burden will suppress free cash flow for several years, but the company views front-loading its $50 billion repurchase authorization at today's valuation as the superior capital-allocation choice.