Talking up the glowing prospects for artificial intelligence is usually a surefire way for companies to get investors excited. But sometimes it doesn’t.
That’s what Salesforce, a provider of (CRM) software found out when it reported Wednesday. Despite better-than-expected results and a surprise $10 billion buyback, muted guidance for the year ahead sent shares lower. The stock was down 2% in premarket trading Thursday.
Guggenheim analysts led by John DiFucci noted that even though the guidance said subscriptions could grow 10% in the 2025 fiscal year, it “no longer looks like a low bar.” They added that “despite management enthusiasm around the recently rebranded Einstein 1 platform (i.e., Generative AI), current guidance does not factor in material contribution” from that for 2025. They maintained a neutral rating on the shares.
Charlie Miner at Third Bridge also has concerns about Salesforce. “AI represents the only non-linear growth opportunity for Salesforce,” he wrote in a note Thursday. “On the flipside, AI has introduced a once-in-a-decade opportunity for competitors to out-innovate Salesforce.”
Things looked even worse for Snowflake. The provider of a storage unexpectedly announced the departure of Chief Executive Frank Slootman, as well as disappointing on 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 Slowflake 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.
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.
Write to Brian Swint at
