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.
Benioff, who in addition to his work at Salesforce owns Time magazine, is one of the Big Tech leaders who has reached out to President Donald Trump this year while trying to convince the government to adopt pro-AI policies to protect U.S. interests as China also aggressively develops the technology.
Salesforce is primarily focused on creating AI agents to automate more customer sales agents while cultivating a digital workforce to replace jobs traditionally held by humans.
Salesforce laid off 4,000 customer support staff as its “Agentforce” technology takes over more responsibilities, a sign that Benioff intends to walk the talk.
But Jay Woods, chief market strategist at investment banking firm Freedom Capital Markets, said corporate customers buying Salesforce services haven’t embraced AI agents as quickly as investors initially thought, making the company a “poster child” for the technology.
Such second-guessing has done nothing to dampen Benioff’s enthusiasm for artificial intelligence—an enthusiasm that has recently manifested itself in a strong endorsement of the latest version of Google’s Gemini technology that powers its AI suite.
“We all know that the speed of innovation has outpaced the speed of customer adoption,” Benioff acknowledged, while confidently predicting that this dynamic will change dramatically as more companies and government agencies incorporate AI services into their operations.
Salesforce expects revenue to reach $60 billion in the fiscal year ending in January 2030, a goal that would require an average annual growth of 10% on forecast sales of $41.5 billion in the current fiscal year. The company also just completed an $8 billion acquisition of Informatica, another software maker that is developing artificial intelligence tools to manage enterprise data.
“We will continue to achieve the $60 billion dream,” Benioff said.