Salesforce's AI Bet Faces Scrutiny Amid Weak Forecast and Market Reaction

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On Wed, 26 Feb, 12:04 AM UTC

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Salesforce's shares fall as weak annual forecast raises questions about AI monetization, particularly for its Agentforce platform. The company's transition to AI-driven solutions faces challenges in showing immediate returns.

Salesforce's AI Strategy Under Scrutiny

Salesforce, the enterprise cloud giant, is facing investor skepticism following its weak annual revenue forecast, which has put a spotlight on the company's artificial intelligence (AI) monetization efforts. Shares of Salesforce fell over 3% in pre-market trading after the company's fourth-quarter earnings report and fiscal 2026 outlook fell short of analyst expectations 12.

Transition to AI-Driven Solutions

Under CEO Marc Benioff's leadership, Salesforce has been making significant efforts to transition beyond traditional cloud computing towards data-driven machine learning and generative AI. This strategic shift aims to capitalize on the rapidly evolving tech landscape 1. The company's flagship AI offering, Agentforce - an AI agent builder platform - has been at the center of this transformation.

Challenges in AI Monetization

Despite the company's ambitious AI plans, the weak annual revenue outlook has raised doubts about the pace of monetization for Agentforce. The adoption cycle for the platform is still in its early stages, with outgoing CFO Amy Weaver projecting "meaningful contribution in fiscal 2027" 1. This timeline suggests that Salesforce may experience slower growth in the near term as it waits for its AI investments to bear fruit.

Market Reaction and Analyst Perspectives

The market's reaction to Salesforce's forecast has been notably negative. If the current losses hold, the company could potentially wipe off over $9 billion from its market value 1. Analysts have expressed concerns about the focus on Agentforce coming at the expense of other business segments. Gil Luria, managing director at D.A. Davidson, noted, "Unfortunately for Salesforce, the focus (on Agentforce) is coming at the expense of the rest of the business which continues to decelerate" 1.

Bright Spots and Future Potential

Despite the challenges, there are some positive indicators for Salesforce's AI strategy. The company's Data Cloud, which is closely tied to its AI initiatives, has shown strong growth. Data Cloud and AI annual recurring revenue rose 120% last year, which analysts believe could lay a foundation for future growth acceleration 15. Additionally, Salesforce reported signing 5,000 Agentforce deals since October, including over 3,000 paid agreements 5.

Competitive Landscape and Industry Trends

Salesforce's AI monetization challenges are not unique in the tech industry. Investors have been pressuring major tech firms, including Microsoft and Meta, to demonstrate returns on their substantial AI investments 1. This scrutiny reflects the broader industry trend of balancing innovation with profitability in the rapidly evolving AI sector.

Salesforce's Response and Future Outlook

In response to the market reaction, Salesforce executives have emphasized the company's long-term vision for AI integration. Benioff has dismissed concerns that agentic AI could threaten the software-as-a-service (SaaS) model, calling it a "Microsoft narrative" 4. The company is also exploring new pricing models for its AI offerings, including a potential shift to a universal credit pricing model 4.

As Salesforce navigates this critical phase of its AI strategy, the company faces the challenge of maintaining investor confidence while continuing to invest in long-term technological advancements. The coming years will be crucial in determining whether Salesforce's bet on AI-driven solutions will pay off and solidify its position as a leader in the enterprise cloud and AI market.

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