Salesforce CEO Marc Benioff attends a World Economic Forum panel discussion in Davos, Switzerland, January 18, 2024.
Stefan Warmus | Bloomberg | Getty Images
shares salesperson Shares rose more than 8% a day after the company reported third-quarter results on Wednesday that beat analysts’ expectations for revenue and guidance and showed strong prospects for its artificial intelligence products.
Salesforce’s third-quarter revenue increased 8% year-on-year to $9.44 billion, higher than LSEG’s forecast of $9.34 billion. The company’s net profit for the quarter was US$1.5 billion, an increase of 25% from US$1.2 billion in the same period last year.
Salesforce raised its revenue guidance for fiscal 2025 to $37.8 billion to $38 billion, slightly higher than the previously reported range of $37.7 billion to $38 billion. The new range puts Salesforce’s fiscal 2025 revenue guidance at the midpoint of $37.9 billion, beating analysts’ expectations.
Analysts at Morgan Stanley reiterated their overweight rating on the stock, saying in a note that “the strength in this stock is strong.” Analysts said they were encouraged by the strong start for Salesforce’s artificial intelligence agency Agentforce, which closed more than 200 deals in the quarter and had “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 for ChatGPT and other related tools powered by large language models.
Goldman Sachs analysts raised their price target on Salesforce to $400 from $360 and reiterated a buy rating on the stock. The company’s Data Cloud and Agentforce are driving “significant pipeline generation” and they are starting to contribute to the fundamentals of the business, analysts said.
“We believe Salesforce remains poised to become one of the most strategic applications companies in the $1 trillion-plus TAM cloud industry, with revenue expected to reach $50 billion,” analysts said in a note on Tuesday.
Likewise, analysts at Bank of America said Salesforce’s third-quarter results showed it was “in a leading position” along with Agentforce, and they reiterated their buy rating on the stock. Analysts raised the price target to $440 from $390.
Analysts said the emerging artificial intelligence agent product cycle has not affected Salesforce’s profit expansion, and there is a meaningful pipeline in services and sales.
“Comments indicate that the guidance assumes no contributions from Agentforce, suggesting that early completion of the Agentforce deal could provide upside,” they wrote on Wednesday.
—CNBC’s Michael Bloom and Jonathan Vanian contributed to this report
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