Salesforce's AI strategy will 'improve' the 2025 story: Analyst
Salesforce (CRM) shares gain in after-hours trading after the company reported mixed quarterly results, with revenue beating estimates while earnings per share (EPS) fell short. CFRA Research senior equity analyst Angelo Zino joins Josh Lipton on Asking for a Trend to share his read of the earnings results. "Overall, the results were fairly kind of in line, I'd say. [It was] somewhat mixed overall, but you kind of look at the quarter here, the October quarter grew the top line about 8% ... slightly better than expected. It was a slight miss on the on the bottom line side of things," Zino outlines. He adds, "More importantly, is what they guided towards in the January quarter, and that was the fact that they're looking for top-line growth of 8%, [which implies] the growth rates are finally starting to stabilize here for Salesforce." "We're absolutely a believer of the name," the analyst says, noting, "We've seen software really underperform here over the last year or so at least relative to other areas of tech like semiconductors. We think software returns back more into favor into 2025, especially on the [software as a service] SaaS side of things, which has kind of been among the worst performing areas of tech." When it comes to Salesforce specifically, he says the company's recently unveiled artificial intelligence (AI) agent is "important" as "it actually gives investors an idea of what this strategy is going to look like as far as AI is concerned" and mitigates some of the "the headwinds for Salesforce, as far as AI has been concerned, is that they've kind of got this subscription-based offering out there, being pressured by enterprises out there." Zino says Salesforce's AI strategy revolves around the data across its ecosystem. "They give kind of the enterprise space a real reason to go on and actually pay for the Salesforce platform" with their subscription-based offerings as well as their consumption-based model, that "we think will help kind of improve the story for Salesforce going into 2025." To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. This post was written by Naomi Buchanan.
