Investing.com -- Bank of America on Monday reinstated coverage of Salesforce with an Underperform rating and a $160 price objective, arguing the enterprise software giant faces a structural reset driven by the rise of artificial intelligence rather than a temporary cyclical setback.

BofA’s thesis rests on three structural concerns: limited net new customer additions, weakening upsell dynamics, and an underwhelming monetization pathway for its AI product, Agentforce.

Analyst Tal Liani said he views Salesforce as "transforming from a historically high growth platform to a mature cash generator," and models revenue growth of roughly 10% annually going forward, a marked deceleration from the 18-28% rates the company achieved from fiscal 2020 (FY20) to FY23.

On Agentforce, Liani acknowledged the headline metrics — 23,000 customers and $800 million in ARR growing 169% year-over-year — but argued that the product’s reach remains narrow. Only 9-10% of Salesforce’s 200,000-plus customers have signed paid Agentforce deals, and more than 60% of bookings came from existing customers rather than new logos.

Liani also highlighted that as Agentforce successfully automates tasks like lead qualification and service case resolution, it reduces the number of human users who need Salesforce subscriptions, pressuring the seat-based model that has historically driven growth.

“We view CRM evolving into a saturated mission-critical system of record, rather than a platform capable of incremental growth monetization,” he said.

The analyst also flagged competitive risks, pointing to encroachment from multiple directions: ServiceNow expanding into CRM-adjacent workflows, Google deploying agent-based orchestration platforms that sit above the application layer, Adobe competing in marketing, and Shopify in commerce.

“While these players often target different subsegments, the net effect is greater overlap, and potential pressure on growth and pricing power,” Liani wrote.

BofA does not expect Salesforce’s existing customer base to abandon the platform, recognizing the depth of its enterprise entrenchment. But Liani argued that entrenchment alone is insufficient to drive incremental growth.

"Enterprise entrenchment is not a growth strategy," he said, noting that with approximately 90% of the Fortune 500 already on Salesforce, the addressable market for new wins is increasingly limited.

BofA’s price target was set using a valuation multiple of 9 times estimated 2027 free cash flow, modestly below the 10.5 times average among software peers.