Salesforce Software Firm Bets on AI Tools to Power Growth

 Shares of Salesforce rose more than 5 percent Thursday as investors cheered the maker of Salesforce customer relationship management software's upbeat quarterly results and its growth-driving artificial intelligence technology.

The company has been investing heavily in integrating its AI technology into existing products, such as its messaging platform Slack, to enhance its functionality and attract more customers.Salesforce is an under-appreciated AI winner because of its differentiated data and early success in creating/deploying GenAI agents.

Reduced cloud spending will hurt Salesforce amid the economic downturn, but the software-as-a-service (SaaS) company posted better-than-expected second-quarter revenue, profit and margins. Salesforce also raised its profit forecast for the year ending January 2025 as margins continued to expand thanks to last year's restructuring efforts. The company's shares trade at 24.49 times Wall Street's profit estimates, compared with 52.11 times for SaaS peer ServiceNow and 13.30 times for cloud contact center company Five9.

If the pre-market gains hold, Salesforce's market capitalization will increase by $14 billion. As of Wednesday's close, the company was valued at $248 billion.

These results alone aren't enough to drive the stock price higher, and more catalysts are needed for that to happen, which could come in the form of new artificial intelligence solutions.