Salesforce's (CRM) fiscal Q4 results could be impacted by factors like foreign exchange headwinds, a cautious approach to guidance under the incoming Chief Financial Officer Robin Washington, and the early-stage nature of potential benefits from generative artificial intelligence, Morgan Stanley said in a note Monday.

The analysts said the company's shares dropped by 7.7% over the past three months, underperforming its large-cap software peers, which saw a decline of 3.8%. This drop was largely driven by changes in the CFO and Chief Operating Officer positions, which led to concerns about disruption from the high turnover. The stock fell by approximately 11% after the announcement of these management changes.

The analysts added that foreign exchange issues have become a greater challenge since the company's Q3 earnings report. While management's Q4 guidance anticipated a $25 million foreign exchange headwind, the analysts estimate a larger impact of about 50 basis points on revenue for Q4, and this risk is likely to increase throughout the year. In terms of management changes, Salesforce announced that Washington will become the new CFO and COO starting on March 21. Given this, the company may take a more conservative approach in setting financial targets for the upcoming fiscal year, the analysts said, adding that on a positive note, acquisitions of Own Company and Zoomin are set to contribute incrementally to Salesforce's performance in the fiscal year 2026.

The analysts said while they are optimistic about the potential of GenAI, they do not expect a significant topline impact for fiscal year 2026, as the adoption of this technology is still in its early stages. Partner feedback suggests growing interest in Salesforce's Agentforce, though the majority of deals are still in the proof-of-concept phase, with larger deals expected to close in H2. They added the company's decision to cut about 1,000 roles this month may help offset concerns about margin pressures from their hiring ramp to capture the Agentforce opportunity.

Salesforce is scheduled to release Q4 results on Wednesday after market close. Morgan Stanley has a $405 price target and is maintaining its overweight rating on the stock.

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