What happened
Shares of cloud computing software giant salesforce.com(NYSE:CRM)were down 8.3% Wednesday as of 4 p.m. ET. It builds on the losses the stock suffered during the final month of 2021 following news of the omicron coronavirus variant and a subsequent tech stock sell-off.
So what
There was no specific news from Salesforce that caused this most recent dip. Rather, it's due to analyst Karl Keirstead of UBS downgrading shares from buy to neutral, and decreasing the one-year price target from $315 to $265. Citing moderating business software growth rates, Keirstead also downgraded Salesforce peer Adobe.
Now what
Big downgrades in analysts' one-year outlook can be problematic for shareholders in the short term, but bear in mind this is but one Wall Street prediction among many. And though business spending on software upgrades is moderating, the cloud industry is still growing at a robust pace -- and is expected by many tech researchers to continue to do so throughout the next decade or so.
Plus, this analyst prediction on a slowdown in Salesforce's growth is no surprise. The company itself already indicated as much a couple months ago when it provided its preliminary outlook for the next year(Salesforce's fiscal 2023). Salesforce expects current year revenue (fiscal 2022) to be up 24%, followed by "only" a 20% increase in fiscal 2023.
Tech business growth rates are a bit wonky right now as they lap the explosion in customer spending early in the pandemic, but that doesn't mean the long-term thesis for staying invested has changed. Salesforce remains a top stock in the cloud computing space as it continues its march toward its $50 billion in annual revenue goal, which it still expects to achieve within the next three years.