Aug 29 (Reuters) – Shares of customer relationship management software maker Salesforce.com Inc (CRM.N) rose about 4 percent on Thursday as investors welcomed the company's strong quarterly results and efforts in artificial intelligence to drive growth.
The company has been investing heavily to integrate AI technology into existing products, such as its messaging platform Slack, to enhance their functionality and attract more customers.
“We continue to believe Salesforce is an underrated AI winner driven by its differentiated data and early success in developing and deploying its GenAI agent,” Goldman Sachs analyst Kash Langan said.
Wall Street had worried that cuts in cloud spending amid a tough economic climate would hurt Salesforce.com, but the software-as-a-service company reported better-than-expected second-quarter revenue, profit and margins.
Salesforce also raised its profit forecast for the fiscal year ending January 2025 as its restructuring efforts last year continued to boost its profit margins.
The company's shares are trading at 24.49 times Wall Street's expected earnings, compared with 52.11 for SaaS peer ServiceNow and cloud contact centre company Five9s (FIVN.O) and 13.30 for new tabs, according to LSEG data.
Salesforce.com Inc. stands to gain about $9 billion in market capitalization if its rally continues. The company was valued at $248 billion as of Wednesday's closing price.
“We don't think these results alone are enough to drive a sustainable upside from here, and we need further catalysts, which could come from a new AI solution,” said Raimo Renshaw, an analyst at Barclays, which unveiled the solution at the company's Dreamforce event and is due to launch in October.
Some analysts believe sustained growth in coming quarters could come through Agentforce, a customer support platform that's not yet commercially available.
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Reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguly
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