Salesforce, Inc. (NYSE: CRM) stock declined on Tuesday after Morgan Stanley downgraded the company from Overweight to Equal-Weight and lowered its price forecast to $185 from $287. The revision reflects concerns that AI momentum has yet to materially improve organic revenue growth, as legacy assets like Commerce and Tableau continue to drag performance. The firm noted that while Agentforce KPIs are inflecting, the monetization of the "agentic pivot" toward headless software is still nascent and will likely take longer than expected to drive growth.

The downgrade follows recent rating actions from other Wall Street firms. On July 20, CLSA initiated coverage with a Hold rating and a $165 price forecast. Earlier, on July 14, Evercore ISI Group maintained an Outperform rating but reduced its price target from $260 to $250, following a downgrade by Keybanc to Sector Weight.

Sector Weakness and IBM Impact

Sector pressure intensified on July 14 when Salesforce shares fell alongside International Business Machines Corp (NYSE: IBM). IBM reported preliminary second-quarter revenue of $17.2 billion, missing the $17.86 billion consensus estimate, and adjusted EPS of $2.93 against a $3.02 estimate. CEO Arvind Krishna described the results as "disappointing," citing a shortfall in the Z mainframe business and software stack as clients shifted capital expenditure toward hardware purchases.

Technical Analysis

Salesforce is trading below key moving averages, indicating a bearish longer-term bias. The stock is approximately 17.5% below its 200-day SMA ($207.80) and 4.2% below its 100-day SMA ($178.89). While it holds about 4.5% above the 20-day SMA ($164.04), the 20-day remains below the 50-day SMA ($171.15), a short-term bearish alignment. The RSI is neutral at 53.50.

Salesforce shares were down 2.14% at $170.07 at the time of publication.

Salesforce, Inc. shares fell 2.85% to $166.34 on Tuesday as investors reacted to disappointing preliminary earnings from International Business Machines Corp, which sparked concerns about weakness in the software and infrastructure sectors. The decline in Salesforce stock comes in sympathy with IBM, where revenue of $17.2 billion missed the consensus estimate of $17.86 billion, and adjusted EPS of $2.93 fell short of the $3.02 projection. IBM CEO Arvind Krishna described the results as "disappointing," noting that clients shifted capital expenditure toward servers and storage, causing several large software deals to slip from the second quarter.

IBM Results Drive Sector Sentiment

The shortfall in IBM's performance was primarily driven by its Z mainframe business and associated software stack. This dynamic raised fears that AI tools could disrupt traditional big software vendors, a sentiment that weighed heavily on Salesforce shares. Salesforce and IBM have maintained a close partnership for over 24 years, including joint AI initiatives integrating Salesforce's Einstein platform with IBM's watsonx AI capabilities. This historical relationship increases the sensitivity of Salesforce's stock to shifts in sentiment regarding IBM's business health.

Analyst Adjustments and Price Targets

Following the news, Evercore ISI Group analyst Kirk Materne maintained an Outperform rating on Salesforce but lowered the price target from $260 to $250. This adjustment follows a downgrade by Keybanc to Sector Weight last week. Despite the recent pressure, Salesforce retains a consensus Buy rating with an average price target of $243.21.

Technical Position and Moving Averages

Prior to the latest drop, Salesforce had attempted a rebound, rising 4.46% to $170.60 on Monday. The stock is now navigating a complex technical setup. It remains 6.5% above its 20-day Simple Moving Average (SMA) of $160.29 but stays below key longer-term averages. The stock is trading 1.2% below its 50-day SMA of $172.68 and 18.7% below its 200-day SMA of $209.93. The Relative Strength Index (RSI) is at 54.35, indicating neutral territory.

Support and Resistance Levels

Key resistance for Salesforce is identified at $187.50, aligning with a prior stall zone and the declining intermediate trend. On the downside, support sits at $146.50, near the 52-week low of $146.32. With the Technology sector under pressure and defensive market flows favoring sectors like Energy, sustained follow-through for tech names remains challenging.