Salesforce Earnings: AI Boost and Investor Expectations

Salesforce (CRM) has emerged as a leading player in the tech industry's "AI wave," driving its stock up by over 61% year to date. As the software giant prepares to release its second-quarter earnings, scheduled for Wednesday after the bell, investors are anxiously awaiting to see how its AI investments will translate into tangible results.

While traditional metrics like revenue and operating margin will certainly be at the center of Wall Street's discussions following Salesforce's Q2 results, the spotlight will also shine on the company's progress in the realm of artificial intelligence.

Salesforce's notable investments in AI technology have garnered significant attention. The anticipation now lies in witnessing whether these investments will yield substantial outcomes sooner rather than later.

Chris Versace, Chief Investment Officer at Tematica Research, noted, "The key here is to go from: Is this the new new thing or is it the real real thing? That’s really what investors want to understand. To some extent … we got a little head-faked on some promises that just really haven’t delivered relative to the hope or hype, if you will."

Anticipated Earnings Numbers

Key figures that Salesforce is expected to report, based on Bloomberg data, include:

• Revenue: Estimated at $8.53 billion
• Adjusted EPS: Estimated at $1.90
• Adjusted Operating Margin: Estimated at 28.2%
• Free Cash Flow: Estimated at $445.1 million

It's worth keeping an eye on the revenue breakdown, as Salesforce categorizes its revenue by sales and subscriptions.

Analyst Insights Pre-Earnings**

Analysts have offered their perspectives ahead of Salesforce's earnings announcement:

• Dan Ives from Wedbush commented, "Overall we saw stronger cross-sell activity this quarter from our checks and particular strength out of the Tableau front with a number of larger more transformational suite wide deals inked during the quarter."
• Brent Thill of Jefferies noted, "The focus will be on whether CRM can deliver upside to the 28% F24 margin guide. We expect commentary on restructuring and AI."
• Tyler Radke from Citi observed, "Our quarter-end fieldwork was decidedly mixed."

The AI Dilemma

Salesforce's progress in the AI landscape holds a pivotal role in shaping investor sentiment. The software giant's investments in AI have promised transformative potential, yet the market awaits solid evidence of its impact. While Salesforce has positioned itself as a leader in the AI wave, the challenge lies in demonstrating the tangible returns of these endeavors.

As the earnings report is unveiled, not only will revenue and operating margin be scrutinized, but the company's AI trajectory will be a key factor in assessing whether the "AI hype" is indeed translating into substantive value.