Salesforce is stocked with a lead beat and a strong pipeline of AI deals
Marc Benioff, CEO of Salesforce, appears on a panel at the World Economic Forum in Davos, Switzerland, on Jan. 18, 2024.
Stefan Wermuth Bloomberg | Getty Images
Shares of Salesforce rose more than 8% on Wednesday, a day after the company reported third-quarter results that beat revenue estimates and analysts’ guidance and showed strong promise for its artificial intelligence offerings.
Salesforce’s revenue grew 8% year over year to $9.44 billion in its third quarter, up from the $9.34 billion expected by LSEG. The company’s revenue was $1.5 billion in the quarter, up 25% from $1.2 billion a year ago.
Salesforce raised its revenue guidance to between $37.8 billion and $38 billion for its fiscal 2025, up slightly from the $37.7 billion to $38 billion it had previously reported. The new range puts the midpoint of Salesforce’s 2025 revenue guidance at $37.9 billion, ahead of analysts’ expectations.
Analysts at Morgan Stanley reiterated their overweight rating on the stock, saying in a note that “the potential is strong as well.” Analysts said they were encouraged by Salesforce’s strong start with its artificial intelligence agent, Agentforce, as it closed more than 200 deals in the quarter with “thousands” more expected.
Salesforce’s Agentforce is an example of so-called AI agent technology. Several companies believe that these advanced chatbots represent the logical next step from ChatGPT and other related tools powered by large language models.
Analysts at Goldman Sachs raised their price target on Salesforce from $360 to $400 and reiterated their buy rating on the stock. Analysts say the company’s Data Cloud and Agentforce are driving “significant pipeline production,” and are beginning to contribute to business fundamentals.
“We believe Salesforce remains poised to be one of the most strategic companies in the $1tn+ TAM cloud industry and is on track for $50bn in revenue,” analysts said in a note on Tuesday.
Similarly, analysts at Bank of America said Salesforce’s third-quarter results suggest it is “outperforming” Agentforce, and reiterated their buy rating on the stock. Analysts raised their price target to $440 from $390.
Analysts said the nascent AI agent’s product cycle is not hindering Salesforce’s margin expansion, and that there is a reasonable pipeline in the service and sales sectors.
“Comments suggest that no Agentforce contribution is contemplated in this guidance, suggesting that early closing of the Agentforce deal could provide a source of improvement,” they wrote on Wednesday.
–CNBC’s Michael Bloom and Jonathan Vanian contributed to this report
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