Salesforce (NYSE: CRM) shares have rallied to their highest level since February, rising 43% from their 2026 low. The stock faces a critical test this week as the company prepares to report second-quarter earnings.

The recent surge aligns with a broader rotation into software names, bolstered by market speculation regarding Silver Lake’s potential acquisition of Workday (NASDAQ: WDAY). Investors are now focused on whether Salesforce’s business is capturing value from the ongoing artificial intelligence boom.

Recent Performance and AI Momentum

In the first quarter, Salesforce reported revenue of $10.6 billion, marking a 13% increase. This growth included $428 million from the Informatica acquisition.

The company highlighted significant expansion in its AI-focused segments. Annual recurring revenue (ARR) for Agentforce and Data 360 jumped 200% to $3.4 billion. This surge was partially driven by the integration of the Informatica business.

Guidance and Capital Returns

Salesforce has historically provided conservative guidance, often resulting in beats and raises. For the second quarter, the company predicted revenue between $11.27 billion and $11.35 billion. A strong performance against these estimates could further support the stock.

Management also emphasized capital return initiatives. The company returned $27.5 billion to shareholders through dividends and buybacks. Additionally, it initiated a $25 billion accelerated share repurchase program, citing a forward PE ratio of 14.80 as evidence that the stock remains undervalued.

Technical Outlook

Technically, CRM stock is approaching a crucial resistance level at $210, which was its peak on June 1. The chart indicates a potential golden cross formation as the 50-day and 200-day Weighted Moving Averages converge.

Analysts note that a breakout could push the stock toward $222.06, its lowest level from November last year. Conversely, weak earnings or guidance could see support tested at $200.

What the Numbers Show

The 200% ARR growth in Agentforce and Data 360 to $3.4 billion suggests rapid adoption of AI tools. However, with $428 million of Q1 revenue attributed to Informatica, investors will scrutinize whether organic growth can sustain this momentum without further acquisitions.

Parnassus Investments Chief Investment Officer Todd Ahlsten warned that the seat-based licensing model, a core revenue driver for enterprise software giants Salesforce (NYSE: CRM) and ServiceNow (NYSE: NOW), faces structural pressure from the rise of AI agents. The concern stems from the potential for companies to increase output without adding employees, thereby reducing the need for additional software licenses.

Ahlsten stated on Bloomberg Tech that the long-term bankability of the seat license model is challenging as AI tools from Anthropic, OpenAI, and Google’s Gemini allow firms to do more work with fewer human users. "The seat license model is just going to be under a lot of pressure," he said. "We wish them well. They're good companies. I just think the long-term bankability of that is going to be challenging."

Shift in Pricing Dynamics

Traditionally, software revenue grew in tandem with corporate hiring. AI disrupts this link by enabling productivity gains without corresponding headcount expansion. Consulting firm Bain & Company analyzed more than 30 SaaS vendors introducing generative AI and found that about 65% had adopted hybrid pricing. This approach layers AI usage or feature-based charges on top of traditional seat pricing, signaling a move away from pure headcount dependency.

Company Adaptations

Both Salesforce and ServiceNow are adjusting their revenue models to account for this shift. They are adding usage-based AI pricing to capture value from digital workers even if human seat growth stalls.

Salesforce CEO Marc Benioff noted that the company maintained its engineering workforce at about 15,000 for roughly two years while AI helped engineers achieve more output. This internal efficiency mirrors the external risk Ahlsten highlighted: if customers grow without hiring, they may require fewer new seats.

However, Salesforce reported on its May earnings call that its Sales and Service products still saw year-over-year seat growth. Additionally, the company noted that its 10 customers making the heaviest use of its AI agents increased their total Salesforce spending by 1.5 times over the previous year.

ServiceNow CEO Bill McDermott told the Wall Street Journal that roughly half of net new business revenue now comes from non-seat-based models. This diversification suggests the company is already mitigating reliance on traditional licensing.

What the Numbers Show

The data reveals a divergence between traditional growth drivers and emerging revenue streams. While Salesforce reports continued seat growth, its highest-value AI adopters are increasing spend by 1.5 times, suggesting that usage-based models may yield higher revenue per unit of engagement than seat licenses alone. Meanwhile, ServiceNow’s disclosure that 50% of net new revenue is non-seat-based indicates a more advanced transition away from headcount-dependent metrics compared to peers still reporting pure seat growth.