Salesforce CEO Marc Benioff Dismisses AI Fears as Stock Plunges 28% Amid SaaSpocalypse Panic

Salesforce CEO Marc Benioff Says Rumors of the 'SaaSpocalypse' Are Greatly Exaggerated

Wall Street believes AI will destroy his business, but Marc Benioff, CEO of Salesforce, begs to differ. Sure, Salesforce stock is down 28% this year on fears that AI agents will replace the software-as-a-service model that made the company a giant. The worst-hit SaaS companies have plummeted twice that much on the same "SaaSpocalypse" thesis: Why pay per employee for software when AI can do the work with fewer people? Benioff thinks the bears have it completely wrong, he told the Wall Street Journal. He says that AI isn't killing Salesforce -- it's making it more valuable. The company invested over $300 million in Anthropic starting in early 2023, and by year-end plans to unveil Agent Albert, a new AI platform that automatically studies users and takes actions on their behalf. Its earlier product, Agentforce, is already used by 23,000 customers to build autonomous agents for workflows. The pitch? Customers can't easily build their own sales software that competes on security, compliance and industry-specific features. And leading AI labs would rather partner with Salesforce than replace it. As Benioff puts it: "People think we have our back against the wall when in fact the opportunity has never been greater."

Software makers' best may not be good enough as AI fears mount

Salesforce anticipates its fastest revenue growth in three years, yet investor confidence in software makers remains low due to AI disruption fears. Despite efforts by CEOs to highlight proprietary data and in-house AI, a sector-wide selloff persists. Analysts expect companies to demonstrate AI's revenue-boosting potential and customer retention capabilities during upcoming earnings reports. Salesforce will likely report its fastest quarterly revenue growth in three years, but analysts say that may not be enough, as fears that artificial intelligence would decimate software makers have sapped investor confidence in the industry. Software CEOs such as Salesforce's Marc Benioff have tried to reassure shareholders that proprietary data, decades of ⁠enterprise experience ⁠and in-house AI offerings would keep customers loyal, even as AI tools from the likes of Anthropic encroach on legal, marketing and customer-service work. But that has not stemmed a selloff in the sector, with the software and services index down around 16% since the start of the year, widely underperforming the broader S&P 500's 3.2% rise. ServiceNow will kick off earnings for major software-as-a-service ⁠firms on Wednesday, followed by Workday and Salesforce likely in May. Wall Street expects Salesforce's first-quarter revenue to have increased 12.5% to $9.83 billion, ⁠its fastest growth in 13 quarters, according to analysts polled by LSEG. But profit growth at the company, one of the most aggressive AI adopters with its Agentforce autonomous agent platform, will likely slow to a near three-year low as costs rise. Meanwhile, ServiceNow is expected to post slightly faster quarterly revenue growth of 21.1%, while Workday's revenue will likely increase at a slightly slower pace at 12.4%. "From a short-term stock market perspective, nothing (software) companies report this quarter or next quarter can really refute that long-term bear case," said Joe Maginot, portfolio manager at Madison Investments. "It's ⁠this more existential question on how things will evolve over the coming three, four, five years and even longer." Experts expect software makers to use earnings to show more aggressively how AI is boosting revenue, how wide their adoption is and whether they are helping retain customers. "The opportunity is there for many incumbents to be successful, especially as the rollout of AI in enterprise is going to take many years," Bernstein analysts said.