Salesforce has executed the first phase of the most audacious capital allocation bet in its 25-year history, issuing $25 billion in senior bonds and immediately deploying the proceeds into an accelerated share repurchase programme — the single largest buyback in the company’s history and one of the biggest debt-funded stock buybacks the tech sector has ever seen.
The bond sale, arranged by JPMorgan Chase, Bank of America, Barclays, Citigroup and Wells Fargo, runs in multiple tranches with the first maturing in 2028 and the final $1 billion tranche not due until 2066 — meaning some of this debt will outlast most of the people who bought it.
CEO Marc Benioff has been explicit about the rationale, saying in a press release: “We are so confident in the future of Salesforce.” That confidence is being expressed directly against a market that has, in Benioff’s view, mispriced the company’s shares in the wake of widespread panic about AI disrupting traditional software business models.
Salesforce shares fell more than 30% earlier this year when the “SaaSpocalypse” narrative — the idea that AI agents will render conventional CRM software irrelevant — swept through enterprise software valuations and hammered an entire sector in weeks.
Benioff’s counter-thesis is that Salesforce’s pivot into “Agentic AI” — AI that acts autonomously on behalf of customers within their CRM workflows — makes the company more valuable, not less, and that the sell-off has created an opportunity to reduce share count at a price management regards as significantly below intrinsic value.
The debt financing has attracted scrutiny from multiple directions. S&P Global downgraded Salesforce’s credit rating due to the increased leverage, a concrete consequence that management accepted when it decided to proceed. Before the offering, the company had $8.5 billion in existing debt and $7.33 billion in cash — a balance sheet that was considered conservative by technology sector standards and has now been transformed into something considerably more aggressive.
The argument against the strategy is straightforward. Raising $25 billion at current interest rates to buy back stock carries long-term financing costs that will weigh on free cash flow regardless of how the AI transition plays out. If Salesforce’s revenue growth disappoints over the next few years, the debt becomes a structural burden rather than a leveraged opportunity.
The argument for it is equally coherent. A lower share count boosts earnings per share mechanically, which lowers the effective valuation multiple and potentially attracts investors back to a name that has been shunned on AI disruption fears rather than on fundamental deterioration.
Salesforce moved 3.19% higher on Monday during the broader market rally driven by Iran peace signals — one of the larger single-day gains in the Dow that session. Whether the buyback proves prescient or premature depends entirely on whether Benioff is right that the market has fundamentally misunderstood where enterprise software is headed.
