Salesforce Stock Falls 7% on Weak Guidance
Salesforce's stock experienced an 8% drop following a disappointing revenue forecast in its quarterly earnings report, marking a 28% decline for 2025, the worst among large-cap tech stocks.
Revenue increased by 10% in the fiscal second quarter compared to the previous year, achieving double-digit growth for the first time since early 2024. Sales reached $10.24 billion, surpassing the average analyst estimate of $10.14 billion, with earnings per share also exceeding expectations.
However, for the fiscal third quarter, Salesforce projected revenue between $10.24 billion and $10.29 billion, falling short of analysts' expectations of $10.29 billion, according to LSEG.
Salesforce frequently highlights its investments in artificial intelligence and advancements in software as a service (SaaS), but the company has not benefited from the AI boom like many of its tech peers, particularly those focused on infrastructure. Concerns persist on Wall Street that AI could erode much of the software sector.
Analysts at KeyBanc Capital Markets noted in a report on Wednesday that while the investor community is anxious about the future of SaaS, Salesforce's current performance, though impressive in scale, is insufficient to change the narrative. They maintain a buy rating on the stock.
Salesforce faces challenges in selling marketing and commerce products, as noted by Robin Washington, the company's president and COO, during a conference call with analysts.
In its earnings release, Salesforce announced it closed over 12,500 total deals for Agentforce, which automates customer service inquiries, including 6,000 paid deals. The company stated that over 40% of bookings for Agentforce and its data cloud came from existing customers.
CEO Marc Benioff remained optimistic, downplaying concerns about the AI threat to software, and told analysts on the earnings call that "we are seeing one of the greatest transformations" in the space. He dismissed criticisms from social media and other sources as "not grounded in any customer truth."
Salesforce maintained its full-year revenue outlook but now anticipates higher earnings. The company is targeting $11.33 to $11.37 in adjusted earnings per share on $41.1 billion to $41.3 billion in revenue.