Salesforce's AI Outlook: Mixed Reviews

As a provider of customer relationship management (CRM) software, Salesforce hoped to impress investors with their latest results. However, the response was not as enthusiastic as expected.

Better-Than-Expected Results… But Not Enough

Despite surpassing expectations and announcing a substantial $10 billion buyback, shareholders were unimpressed by the company's outlook for the upcoming year. This led to a 2% drop in premarket trading on Thursday.

Analysts' Insights

The guidance provided by Salesforce indicated a potential 10% growth in subscriptions by the 2025 fiscal year. However, Guggenheim analysts, headed by John DiFucci, expressed doubts about the feasibility of this target. They pointed out that the introduction of the Einstein 1 platform (Generative AI) did not seem to play a significant role in the forecast for 2025.

Mixed Sentiments Among Experts

Charlie Miner from Third Bridge raised concerns about Salesforce's reliance on artificial intelligence (AI) for future growth. In a note on Thursday, he highlighted AI as a critical aspect of non-linear growth for the company. However, he also warned that this reliance could create opportunities for competitors to outshine Salesforce in terms of innovation.

Snowflake Faces Challenges while Okta Thrives

Snowflake Struggles Amid CEO Departure and Guidance Disappointment

Things looked even worse for Snowflake. The provider of a platform for big data storage unexpectedly announced the departure of Chief Executive Frank Slootman, as well as disappointing guidance for the coming year. The stock plunged 22% in the premarket to $178.70. Coming into the session, it was up 70% over the past 12 months.

“We expect that the guidance includes an extra level of conservatism, given the CEO transition, but a huge question will be what Snowflake is seeing in consumption demand that is behind this outlook,” said Evercore ISI analysts led by Kirk Materne. They nevertheless maintained an Outperform rating on the stock with a price target of $250.

Okta Soars on Strong Earnings Report

Earnings for Okta, the software security firm, told a different story. Its shares surged 24% in the premarket to $108.06. D.A. Davidson’s Rudy Kessinger noted the better-than-expected earnings, but remained cautious about the outlook. He has a Neutral rating on the stock with a $100 target.

“Guidance remains very conservative, and we see continued upside to estimates as likely throughout the year, but we see no end in sight to the growth deceleration,” he said.