Salesforce begins up to $25B debt raise for stock buybacks

Salesforce is levering up and taking on debt to buy back stock, which is the playbook of IBM and old Oracle, while paying about $3.5 billion a year in stock comp. Borrowing heavily to fund buybacks rather than investing in AI infrastructure or M&A signals that management may lack high-return internal growth opportunities. Furthermore, a significant portion of the buyback simply absorbs stock-based compensation dilution rather than creating true shareholder value, leaving the company vulnerable if its core growth slows. AVOID. Tripling the company's debt to engineer earnings per share, while organic AI revenue remains under 2 percent, presents an unfavorable risk profile compared to faster-growing software peers. If AI disruption fears are overblown and Agentforce scales rapidly, the leveraged buyback will result in massive EPS accretion and drive the stock significantly higher.

ServiceNow, Datadog, and Shopify have all bounced back from the severe software sell-off. The market is picking winners in that sell-off and CRM just isn't one of them yet. Investors are actively rotating capital out of legacy software companies relying on financial engineering and into high-quality names that are successfully maintaining organic growth and navigating the AI transition. These relative strength leaders will continue to capture premium multiples as capital concentrates in proven winners. LONG. These companies have proven their resilience and are being rewarded by the market as structural leaders in the enterprise software space. A broader macroeconomic slowdown or a sector-wide multiple compression could disproportionately impact these higher-valuation growth names regardless of their individual execution.