SAN FRANCISCO (AP) — After taking the artificial intelligence craze to new heights, business software maker Salesforce has been hit by a wave of investor skepticism, increasing pressure on its persuasive Chief Executive Officer Marc Benioff to turn around the situation.
Benioff, who helped spearhead the shift to cloud computing after founding Salesforce in 1999, has a chance to try to change the narrative on artificial intelligence when the company releases its latest quarterly results late Wednesday.
Key data from August to October beat analyst forecasts that help guide the stock market, giving Benioff some material to back up his argument that Salesforce’s big bet on artificial intelligence will pay dividends. The San Francisco-based company earned $2.1 billion, or $2.19 a share, up 37% from a year earlier, on revenue that rose 9% to nearly $10.9 billion. Salesforce also provided an outlook for the current quarter ending in January, beating analysts’ forecasts.
“We are uniquely positioned in this new era,” Benioff boasted during a 25-minute speech on an analyst call that at times sounded like an AI sermon and included comments about the “wow” moments customers experience when seeing the company’s technology.
Salesforce shares initially surged more than 5% after the results were announced, but fell back to 2% after Benioff’s speech.
It’s unclear whether the modest momentum will continue into Thursday’s regular trading session, as making more money than analysts expect isn’t necessarily enough to keep driving tech stocks amid ongoing doubts about whether the hundreds of billions of dollars poured into the much-hyped technology will pay off.
Nvidia, a major maker of chips needed for artificial intelligence, allayed concerns a few weeks ago with a quarterly earnings report that far exceeded analysts’ expectations and initially eased fears of a big tech bubble bursting.
But that calm quickly evaporated, leaving Nvidia’s stock trading just below where it was before the company’s stellar earnings report and 15% below the peak price it reached in late October when the chipmaker became the first company to be valued at $5 trillion.
AI jitters punish Salesforce even more severely. Before the earnings report, Salesforce’s market value had plummeted 35% since its stock price peaked at $369 a year ago, wiping out about $125 billion in shareholder wealth.
The recession comes even as Benioff has gone to great lengths to highlight the potential benefits of artificial intelligence while tapping into the sales talents he developed when he became a leading evangelist for the rise of software subscription services in the ashes of the dot-com bust a quarter-century ago.