Salesforce Surges on Strong Earnings, Raises Forecast
Company beats Q3 estimates and lifts full-year revenue guidance, citing strong demand for its AI-powered cloud software.
Salesforce (NYSE: CRM) shares surged in after-hours trading Wednesday after the enterprise software giant delivered third-quarter results that surpassed analyst expectations and raised its full-year revenue forecast, signaling robust demand for its artificial intelligence products.
The San Francisco-based company, a bellwether for the cloud software industry, reported adjusted earnings of $3.25 per share for the quarter, handily beating the Wall Street consensus of $2.86. The strong performance underscored Salesforce's success in integrating AI into its product suite to drive sales and customer engagement.
In a statement accompanying the results, the company provided an optimistic outlook for the coming months. It boosted its full-year revenue guidance to a range of $41.45 billion to $41.55 billion. Furthermore, its fourth-quarter revenue projection of $11.13 billion to $11.23 billion came in comfortably ahead of the $10.91 billion analysts had anticipated, easing investor concerns about a broader slowdown in corporate IT spending.
Shares of Salesforce closed up 1.7% at $238.72 in regular trading Wednesday before jumping in the extended session following the release. The positive momentum reflects growing investor confidence in the company's strategic pivot towards high-margin AI-driven services.
The company highlighted the performance of its new AI-powered platforms, including Agentforce and Data 360, as key drivers of growth. These tools are part of Salesforce's broader strategy to create what it calls the "agentic enterprise," using AI to automate complex tasks and provide predictive insights for its corporate clients. This focus on AI appears to be paying off, helping the company defend its market leadership against rivals like Microsoft, Oracle, and SAP, which are also heavily investing in artificial intelligence.
Prior to the earnings announcement, analysts had noted the rapid growth of Salesforce's Data Cloud and AI business, which was already generating over $1.2 billion in annual recurring revenue. The company has fortified its AI capabilities through strategic partnerships with industry leaders such as Google, OpenAI, and Anthropic, ensuring its platforms remain at the cutting edge of enterprise AI.
The stronger-than-expected forecast suggests Salesforce is successfully navigating a complex macroeconomic environment. While many corporations have scrutinized their software budgets, the tangible productivity gains offered by AI tools are proving to be a compelling value proposition. By embedding AI across its core Customer 360 platform, Salesforce is positioning itself as an indispensable partner for businesses undergoing digital transformation.
Investors will be closely watching for further commentary from executives on the company's earnings call, particularly regarding the adoption rates of its new AI products and the outlook for profit margins. With a pre-earnings consensus analyst price target of approximately $328, the latest results could prompt a wave of upward revisions from Wall Street as the market digests the strong guidance and the company's accelerating AI momentum.