Salesforce shares rose to 4% on Thursday as investors responded positively to the company’s strong quarterly performance and its aggressive push into artificial intelligence.
The customer relationship management software firm reported better-than-expected revenue, profit, and margins for the second quarter, bolstered by its ongoing investment in AI technologies.
The company is integrating its AI capabilities into products like its messaging platform, Slack, aiming to enhance their functionality and attract more customers. This strategy has been viewed favorably by analysts, including Goldman Sachs’ Kash Rangan, who highlighted Salesforce as an “under-appreciated AI winner” due to its unique data assets and early success with generative AI agents.
Despite concerns that reduced cloud spending could impact Salesforce amid a challenging economic environment, the company exceeded Wall Street’s expectations. Salesforce also revised its profit forecast upward for the fiscal year ending January 2025, citing improved margins from last year’s restructuring efforts.
Currently, Salesforce’s stock is trading at 24.49 times Wall Street’s profit expectations, a lower valuation compared to SaaS peer ServiceNow, which trades at 52.11 times, and cloud contact center firm Five9, at 13.30 times, according to LSEG data.
If the stock gains hold, Salesforce could add approximately $9 billion to its market capitalization, which was $248 billion as of Wednesday’s close. However, Barclays analyst Raimo Lenschow cautioned that while the results are promising, a sustainable rally would require additional catalysts, possibly from new AI solutions to be showcased at the Dreamforce event and launched in October.
Analysts are particularly optimistic about Salesforce’s upcoming customer support platform, Agentforce, which could drive sustained growth once it becomes commercially available.
