<\/p>\n
Salesforce shares are down 24% this year.<\/p>\n
(Bloomberg) — After months of pain, Salesforce Inc. investors will be scrutinizing the software maker\u2019s upcoming earnings for signs it will be a winner in the artificial intelligence boom \u2014 or one of its most high-profile victims.<\/p>\n
Most Read from Bloomberg<\/p>\n
Salesforce shares are down 23% this year, putting them among the 30 worst-performing stocks in the S&P 500 Index. It\u2019s been a swift reversal for what had been a bright light in the market, soaring over 150% in 2023 and 2024 combined. The plunge has been particularly dramatic in light of the strong showings by software giants like Microsoft Corp., Oracle Corp., and Palantir Technologies Inc., all of whom are considered to be stronger in AI.<\/p>\n
While Salesforce, which makes customer relationship management software, has its own AI products, concerns about its long-term trajectory mean the shares may languish even if the company posts strong earnings when it reports after the bell on Wednesday. The stock rose 1.4% Wednesday morning.<\/p>\n
\u201cI\u2019m not expecting a major AI contribution to Salesforce over the next several quarters, and in the meantime there are a lot of concerns that AI can disrupt and replace the legacy software names,\u201d said Jake Seltz, who manages the Allspring LT Large Growth ETF, which owns Salesforce shares. \u201cI\u2019m optimistic it will eventually be a winner, but it may take a couple years, and right now there\u2019s more interest in the companies that are already benefiting.\u201d<\/p>\n
<\/p>\n
Salesforce is expected to post revenue growth of nearly 9% from a year ago in its fiscal second quarter, with a 23% increase in net earnings. While that would represent its fastest sales expansion in more than a year, it would still be the fifth straight quarter below 10%, something that hadn\u2019t happened for almost two decades. The company\u2019s annual revenue isn\u2019t expected to grow at a double-digit pace until fiscal 2029.<\/p>\n
<\/p>\n
Salesforce\u2019s previous earnings report showed its Agentforce AI platform gaining traction. Similarly, the company considers its $8 billion acquisition of data-management software company Informatica Inc. a key piece of its AI strategy. However, investors remain unsure whether AI will be a tailwind or a headwind for the stock.<\/p>\n
The company isn\u2019t alone in its struggles. Other long-time software leaders like Adobe Inc. have also been hobbled this year by fears that their growth could be usurped by AI-native competitors.<\/p>\n
Story Continues <\/p>\n
The software industry faces three threats from AI, according to KeyBanc Capital Markets, and Salesforce is exposed to two of them: AI-written coding that can generate features and applications, and AI shrinking workforces and thereby reducing demand for seat-based business models like Salesforce\u2019s.<\/p>\n
\u201cThere was a lot of fanfare about Agentforce, but the revenue numbers haven\u2019t been amazing, especially relative to a company of this size, and that\u2019s been disappointing,\u201d said Rishi Jaluria, managing director of software equity research at RBC Capital Markets, who downgraded the shares earlier this year after being a long-time Salesforce bull.<\/p>\n
\u201cThere are real questions about how mature the tech is and whether it can deliver on the promise, especially since we will only see more AI competitors going forward,\u201d Jaluria added. \u201cUnless Agentforce becomes a must-have, I worry growth will continue to slow.\u201d<\/p>\n
Potential Bargain<\/p>\n
Of course, given the plunge in Salesforce\u2019s stock price this year, low expectations heading into this earnings report make it easier for the company to surprise to the upside. The analysts covering the shares have an average price target of about $336 over the next 12 months, indicating upside of more than 30%, according to data compiled by Bloomberg.<\/p>\n
The company\u2019s stock market valuation also suggests room to run. Salesforce shares trade at just 21 times blended forward earnings, not far from an all-time low and a fraction of their long-term average.<\/p>\n
<\/p>\n
In a measure of confidence, the hedge fund Starboard Value raised its stake in Salesforce by more than 400,000 shares as of June 30, according to Bloomberg\u2019s analysis of Starboard\u2019s 13F filing.<\/p>\n
Still, the company\u2019s prospects likely come down to AI, making a cheap valuation beside the point in many ways. For example, investors have largely looked past Palantir\u2019s chart-topping valuation because of its strong position in AI. What is Salesforce worth if it isn\u2019t a major player in this boom?<\/p>\n
\u201cSo long as we have limited visibility on AI growth, the multiple will continue to come down,\u201d said RBC\u2019s Jaluria. \u201cEven though it isn\u2019t expensive, if growth continues to slow, its hard to stick my neck out and say buy now.\u201d<\/p>\n
Tech Chart of the Day<\/p>\n
<\/p>\n
Nvidia Corp. closed below a key technical level for the first time since May as investors continue to rotate out of the leading maker of artificial intelligence chips. The stock fell 2% to $170.74 on Tuesday, a fourth straight negative session that took it below its 50-day moving average of $171.06. Breaking under this closely watched level is seen as a negative sign of near-term momentum trends.<\/p>\n
Top Tech Stories<\/p>\n
Alphabet Inc.\u2019s Google will be required to share online search data with rivals while avoiding harsher penalties, including the forced sale of its Chrome business, a judge ruled in the biggest US antitrust case in almost three decades.<\/p>\n<\/li>\n
Apple Inc. shares gained after a US judge stopped short of barring its lucrative search arrangement with Google, a deal that has generated roughly $20 billion in revenue a year for the iPhone maker.<\/p>\n<\/li>\n
Apple\u2019s lead artificial intelligence researcher for robotics has departed the company to join Meta Platforms Inc.\u2019s competing effort, part of an exodus of AI talent from the iPhone maker.<\/p>\n<\/li>\n
The US has revoked Taiwan Semiconductor Manufacturing Co.\u2019s authorization to freely ship essential gear to its main Chinese chipmaking base, potentially curtailing its production capabilities at that older-generation facility.<\/p>\n<\/li>\n
Anthropic has closed a deal to raise $13 billion from investors in a new funding round that nearly triples its valuation to $183 billion, including dollars raised \u2014 a larger-than-expected haul that makes the artificial intelligence company one of the most valuable startups in the world.<\/p>\n<\/li>\n<\/ul>\n
Earnings Due Wednesday <\/p>\n
–With assistance from Subrat Patnaik and David Watkins.<\/p>\n
(Updates to market open.)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"Salesforce shares are down 24% this year. (Bloomberg) — After months of pain, Salesforce Inc. investors will be…\n","protected":false},"author":2,"featured_media":40990,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[261],"tags":[291,289,290,4932,18,19,17,14609,14083,15336,31150,82],"class_list":{"0":"post-40989","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-bloomberg","12":"tag-eire","13":"tag-ie","14":"tag-ireland","15":"tag-revenue-growth","16":"tag-salesforce","17":"tag-software-company","18":"tag-software-maker","19":"tag-technology"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/40989","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=40989"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/40989\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/40990"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=40989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=40989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=40989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}