Salesforce benefits as software company

places bets on AI tools to spur expansion

 

 

 

Investors welcomed the customer relationship management software maker’s positive quarterly results and its artificial intelligence effort to boost development, and shares of Salesforce (CRM.N), opens new tab, climbed roughly 4%.

In order to improve the functionality of its current products and draw in additional users, the business has been making significant investments to incorporate its AI technologies into platforms like its messaging app Slack.

“We continue to see Salesforce as an under-appreciated AI winner as its differentiated data and early success in creating/deploying GenAI agents,” Goldman Sachs analyst Kash Rangan said.

Wall Street was concerned that tempered cloud spending would affect Salesforce in a tough economy, but the software-as-a-service (SaaS) firm reported better-than-expected revenue, profit and margins in the second quarter.

Salesforce also raised its profit forecast for the year ending January 2025, as margins continue to expand, thanks to its restructuring efforts last year.

The stock is trading at 24.49 times that of Wall Street’s profit expectations, compared with 52.11 for SaaS peer ServiceNow and cloud contact center firm Five9’s (FIVN.O), opens new tab 13.30, according to LSEG data.

Salesforce is set to add about $9 billion to its market capitalization if gains hold. The company’s valuation stood at $248 billion as of Wednesday’s close.

“We think these results alone are not good enough to drive a sustainable rally from here. For that, we need more catalysts, which could come with the new AI solutions,” which are set to be showcased at its event Dreamforce and launched in October, Barclays analyst Raimo Lenschow said.

Some analysts believe that sustained growth in the coming quarters can come through customer support platform Agentforce, which is not yet commercially available.