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 popped more than 8% Wednesday, a day after the company reported third-quarter results that exceeded analysts’ estimates for revenue and 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 net income was $1.5 billion in the quarter, up 25% from $1.2 billion a year ago.
Salesforce raised revenue guidance to between $37.8 billion and $38 billion for its fiscal 2025, up slightly from $37.7 billion to $38 billion it had previously reported. The new range puts the midpoint for Salesforce’s fiscal 2025 revenue guidance at $37.9 billion, ahead of analysts’ expectations.
Analysts at Morgan Stanley reiterated their overweight rating on the stock, stating in a note that “the force is strong with this one.” The analysts said they are encouraged by Salesforce’s strong start with its artificial intelligence agent, Agentforce, as it closed more than 200 deals during the quarter with “thousands” more in the pipeline.
Salesforce’s Agentforce is an example of so-called AI agent technology. Several companies believe these advanced chatbots represent the next logical step from ChatGPT and other related tools powered by large language models.
Goldman Sachs analysts raised their Salesforce price target from $360 to $400 and reiterated their buy rating on the stock. The analysts said the company’s Data Cloud and Agentforce are driving “notable pipeline generation,” and they’re starting to contribute to the fundamentals of the business.
“We believe that Salesforce remains poised to be one of the most strategic application software companies in the $1tn+ TAM cloud industry and is on a path to $50bn in revenue,” the analysts said in a Tuesday note.
Similarly, analysts at Bank of America said Salesforce’s third-quarter results suggest it is “leading the way” with Agentforce, and they reiterated their buy rating on the stock. The analysts raised their price target to $440 from $390.
The analysts said the emerging AI agent product cycle is not derailing Salesforce’s margin expansion, and that a meaningful pipeline exists in the service and sales sectors.
“Commentary suggests no contribution for Agentforce is assumed in the guide, suggesting early Agentforce deal closure could provide a source of upside,” they wrote Wednesday.
–CNBC’s Michael Bloom and Jonathan Vanian contributed to this report
