New York, February 5, 2026, 11:40 (EST) — Regular session
- Shares of Salesforce dropped roughly 4% in late-morning trading, dragged down amid ongoing weakness in software stocks
- Enterprise software valuations have been dragged down by renewed concerns over AI-driven disruption
- Salesforce scheduled its quarterly and full-year earnings for Feb. 25, marking a crucial upcoming catalyst
Salesforce shares dropped 3.6% to $192.29 on Thursday, bouncing between $190.62 and $200.40 earlier in the session. Selling pressure came back to big-name software stocks, with over 6.6 million shares traded by late morning.
The shift matters now as investors scramble to reprice software stocks after a sharp sector selloff earlier this week. Anthropic’s Claude, a large language model (LLM), just got a new legal plug-in that’s stoking fears about AI “agents” — software that can act on users’ behalf — encroaching on daily corporate tasks and undercutting subscription fees. “The selloff is a manifestation of an awakening to the disruptive power of AI,” said James St. Aubin at Ocean Park Asset Management. JPMorgan’s Mark Murphy pushed back, calling it “an illogical leap” to think one tool will replace mission-critical enterprise software. (Reuters)
Tech sentiment took another hit after Alphabet revealed its capital spending might double this year, while Qualcomm delivered a downbeat forecast. Both moves shook the crowded “AI trade” and dragged megacaps lower. “The AI trade … is perhaps the extinguisher this year,” said Melissa Brown, SimCorp’s managing director of investment decision research, noting software could be one of the hardest-hit sectors. (Reuters)
Volatility has spiked as leveraged investors unwind positions, with short interest—shares borrowed for bets against companies—rising in mid- to large-cap software stocks, data provider Ortex told Reuters. Societe Generale’s Manish Kabra said the market doubts whether software firms’ “earnings-compounding nature” can hold up. Saxo’s John Hardy, speaking on a podcast, flagged leverage hitting record highs. (Reuters)
Salesforce, the customer relationship management software provider, announced it will report its fourth-quarter and full-year fiscal 2026 results on Wednesday, Feb. 25, after markets close. A conference call is scheduled for 5 p.m. ET. (Salesforce Investor Relations)
Investors are zeroing in on core metrics: subscription demand, the pace at which new AI offerings convert into paying users, and whether clients continue to grow their contracts amid tight budgets. Traders often focus on remaining performance obligations — basically backlog — as a gauge of revenue visibility when sentiment wavers.
Salesforce updated its annual projections back in December, setting fiscal 2026 revenue between $41.45 billion and $41.55 billion while also raising its adjusted earnings forecast. This followed a third-quarter revenue report of $10.26 billion, Reuters reported, citing LSEG data. (Reuters)
Salesforce isn’t the only one feeling the pressure. Other big enterprise players have also taken a hit as investors scramble to sort out which software firms will emerge as “AI winners” and which might face pricing challenges as tools become cheaper and more powerful.
The downside is clear: if the market sees AI agents turning parts of enterprise software into a commodity — or if Salesforce’s Feb. 25 update reveals slower growth, dimmer visibility, or higher costs — the stock might stay pressured, regardless of a steadier broader market.
The next key event comes Feb. 25, right after the closing bell, when Salesforce releases its earnings and management fields questions on the call.
