Salesforce Will Be One of the Most-Watched AI Stocks This Year — It Just Disappointed in Earnings Despite Stronger Adoption
As tech titans yank out their checkbooks for data center and AI upgrades this year, there’s one question on every investor’s mind — when can we expect some ROI? If there’s any indication, it might come from software Swiss army knife Salesforce, which staked its fortunes on the nascent technology after its growth hit a record low last year. But investors are getting antsy nearly a year later despite assertions that their new Agentforce AI platform was working.
Weak Sales(force): The cloud service had risen up to 28% in recent months from its 2024 lows as an AI spending blitz reinvigorated investors meant to position the struggling firm as a first-mover in agentic AI, a kind of computer program that can independently handle complex business tasks. But despite assertions that the product was fast-growing, well-received, and well-adopted, Salesforce’s Wednesday earning report left investors wondering if their own excitement was misplaced.
- Despite completing more than 3K paid deals for Agentforce since October, the company’s enterprise AI is only expected to “make a modest contribution to revenue” this fiscal year.
- Worsening matters, Salesforce missed on revenue in the fourth quarter and issued a forecast that left something to be desired — projecting 7.4% growth this year.
Still Early
Salesforce is still in the early oughts of selling enterprises on AI, but signs of progress — or the lack thereof — are likely to be heavily scrutinized by investors this year as they look for evidence of AI adoption. The data points are muddy at best.
- While earnings for semiconductor giants like Nvidia have been strong and obvious, results from first-movers like OpenAI have shown massive losses in the face of tapering adoption.
- Google and Microsoft began adding AI to their core products and raising prices, which many saw as an admission that their AI products were not independently performing.
Teaming up: For Salesforce, there’s no other game in town but Agentforce — especially as its growth continues to slow. And after a disappointing earnings report, investors are pushing down. Still, analysts are scraping up nuggets of optimism, hoping that Salesforce’s forecast was simply a conservative outlook. After all, Agentforce is just starting to get off the ground — and a partnership between Salesforce and Google could help make Agentforce stronger with the help of Gemini.
