Salesforce (CRM) shares are taking a hit Tuesday after Morgan Stanley poured cold water on the stock, downgrading it from Overweight to Equal-Weight and slashing its price target to $185. The move adds to a growing chorus of caution from Wall Street, as the cloud software giant tries to convince investors that its AI push will eventually pay off.

Morgan Stanley's analysts acknowledged that Salesforce's "Agentforce" key performance indicators are improving, but they're not yet translating into the kind of revenue growth that would justify a bullish stance. "Agentforce KPIs are inflecting, but AI momentum has yet to bend the cRPO/organic revenue growth curve as legacy assets (namely Commerce, Tableau) continue to drag," the firm wrote.

The analysts also noted that Salesforce is making the right "agentic pivot" toward headless software—a more modular, API-driven approach—but monetization is still in its early stages. The push to reignite growth is likely to take longer than expected, they said.

This downgrade is just the latest in a string of cautious calls. On July 20, CLSA initiated coverage on Salesforce with a Hold rating and a $165 price target. A week earlier, on July 14, Evercore ISI Group maintained an Outperform rating but lowered its price target from $260 to $250. That adjustment came after Keybanc downgraded the stock to Sector Weight the prior week.

Preliminary IBM Earnings Pressure Sector

Sector weakness has been building since July 14, when Salesforce stock fell in sympathy with IBM (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. IBM CEO Arvind Krishna called the results "disappointing" in a letter to investors, citing a shortfall in IBM's Z mainframe business and software stack. Clients shifted capital expenditure toward servers, storage and memory purchases in late June to secure supply ahead of expected price increases.

Technical Analysis

CRM is trying to stabilize, but the longer-term trend is still pointed down: the stock is trading about 17.5% below its 200-day simple moving average ($207.80) and about 4.2% below its 100-day SMA ($178.89). It's also stuck in a choppy "in-between" zone—about 4.5% above the 20-day SMA ($164.04) but only about 0.2% above the 50-day SMA ($171.15), with the 20-day still below the 50-day (a bearish short-term alignment).

The relative strength index at 53.50 is neutral, which tells traders the move isn't stretched enough to force a mean-reversion bounce or a momentum breakdown on its own. The more important tell is structure: the 50-day remains below the 200-day, keeping the longer-term bias bearish unless price can reclaim higher moving averages and hold them.

• Key Resistance: $187.50 — a nearby ceiling that lines up with a prior pivot zone above current price, where rebounds can stall before the 100-day area
• Key Support: $171 — a nearby line in the sand sitting right around the 50-day moving average zone, where buyers have recently shown up

CRM Price Action: Salesforce shares were down 2.14% at $170.07 at the time of publication on Tuesday, according to market data.