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Productivity

AI is the thorn in Salesforce’s side

The company reported quarterly earnings that missed Wall Street’s estimates for the first time since 2006.

AI is the thorn in Salesforce’s side
Anna Kim
By
Cassandra Cassidy
31 May 2024
Less than a 3 min read
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Aside from its annual company conference that advertises as if it were a musical festival for children, Salesforce isn’t in a very happy place right now. The cloud software company posted some of its worst results ever on Wednesday, a worrying sign that the enterprise software industry is struggling to contend with AI.

In response to Q1 earnings that showed growth slowing down, Salesforce stock fell 20% yesterday. It was the stock’s worst day in 20 years and could cause Salesforce’s market value to drop by nearly $50 billion if these doldrums persist. Some lowlights:

  • For the first time since 2006, the company missed estimates. It reported 11% revenue growth to $9.13 billion, short of Wall Street’s $9.17 billion forecast.

  • Billings increased by a record-low 3% year over year.

What’s got Salesforce so blue? That would be AI. There’s less money flowing to enterprise software spending because investors are pumping so much money into AI, and analysts aren’t convinced that Salesforce can use AI to boost profitability anytime soon.

Big picture: Cloud software isn’t the cash cow it used to be. Other companies like Workday and UiPath have seen their stocks sell off after posting less-than-stellar results.—CC

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