Salesforce (CRM) is leaning into financial engineering to support its share price after a sharp sell-off tied to worries about AI disruption. The company is issuing $25 billion in debt to fund an accelerated stock buyback—part of a broader $50 billion repurchase authorization approved earlier this year.

CNBC reported management views the recent decline as an opportunity, arguing confidence in the company’s long-term prospects. The article also noted insider purchases, including buys by board members.

Why fund buybacks with debt? The core rationale is cost of capital. Debt can be cheaper than equity—especially after tax—so increasing leverage can reduce a company’s weighted average cost of capital (WACC), at least until investors start to penalize the balance sheet risk.

CNBC cited bond yields implying a pre-tax cost of debt in the mid-6% range for longer maturities, versus an estimated cost of equity near the high-single digits based on standard assumptions.

What stock-market investors should watch:

- Credit metrics and rating actions: more leverage can raise future borrowing costs

- Free cash flow coverage: the buyback only works if operating performance comfortably services the new debt

- Competitive dynamics in AI: if customers shift to alternative AI-native tools faster than expected, leverage becomes a risk amplifier

Bottom line: Debt-funded repurchases can boost earnings per share and signal confidence, but they also reduce balance-sheet flexibility. The success of the strategy will likely hinge on whether Salesforce proves it can sustain growth and pricing power in an AI-driven software landscape.