Salesforce Issues $25 Billion Debt to Accelerate $50 Billion Stock Buyback Amid AI Growth Uncertainty

What happened

Salesforce has announced it will take on $25 billion in debt to help finance its up to $50 billion stock repurchase program, which was already controversial among analysts. This decision comes despite the company's strong free cash flow generation of $14.4 billion in FY26, as highlighted in the DeepValue report, which had previously supported capital returns without significant leverage. The report notes Salesforce had $14.5 billion in debt principal as of January 2026, and increasing debt could erode the financial flexibility that provides a partial margin of safety. While buybacks may boost per-share metrics temporarily, the added leverage heightens risks if operational scoreboards like current RPO growth or Agentforce monetization disappoint in the coming quarters. Investors must now assess whether this move reflects confidence in sustained cash flow or introduces unnecessary financial strain in a 'prove-it' AI growth environment.

Implication

The $25 billion debt issuance significantly raises Salesforce's leverage, potentially weakening its net debt position and interest coverage, which were previously strengths. If AI monetization fails to accelerate as projected, the company could face pressure from higher debt servicing costs without corresponding revenue growth. Buybacks may artificially inflate earnings per share in the short term, but long-term value creation still hinges on operational execution, particularly in current RPO growth and Agentforce metrics. This move signals management's prioritization of shareholder returns over debt reduction or reinvestment in growth, even as the market demands clearer AI revenue proof. Investors should monitor upcoming quarterly reports for subscription growth deceleration or backlog weakness, which could exacerbate the risks introduced by this increased leverage.

Thesis delta

The original thesis centered on Salesforce proving AI monetization with buybacks as a supportive element; the new debt issuance shifts the risk profile by adding financial leverage that could amplify downside if operational metrics like cRPO growth falter. This introduces a capital allocation risk that reduces the margin of safety, making the investment more sensitive to near-term performance in a weakening RPO environment.