Salesforce is having its best week in nearly two years, with shares jumping another 5% Friday after the cloud giant's third-quarter earnings smashed Wall Street expectations. The rally caps off a 13% surge over five days, positioning the enterprise software leader for its strongest weekly performance since 2023 despite ongoing investor concerns about AI's impact on traditional SaaS companies.
Salesforce just delivered the kind of earnings surprise that reminds Wall Street why it became a cloud computing giant in the first place. The company's shares rocketed 5% higher Friday, extending what's shaping up to be the stock's best week since 2023 after Wednesday's third-quarter results crushed profit expectations.
The earnings beat couldn't have come at a better time for Salesforce. While the broader AI boom has sent companies like Nvidia and Microsoft to record highs, cloud software firms have struggled through a tough year. Investors keep questioning whether AI will make traditional SaaS platforms obsolete - a narrative that's hammered Salesforce stock down 21% year-to-date even as the Nasdaq gained 22%.
But CEO Marc Benioff isn't buying the doom and gloom. "Investors somehow think software companies are under arrest from AI, when the opposite is true," he told CNBC's Jim Cramer Thursday. The company's Q3 numbers seem to back up his confidence - adjusted earnings per share hit $3.25, demolishing Wall Street's $2.86 estimate.
Revenue tells a slightly different story. The company's $10.26 billion in quarterly sales grew 8.6% year-over-year but fell just short of analyst projections for $10.27 billion. It's the kind of near-miss that might normally worry investors, but the market's clearly focused on the bottom-line surprise and what it signals about Salesforce's ability to navigate the AI transition.
The real story is playing out in Salesforce's AI strategy. During the quarter, the company snapped up two AI startups - Regrello and Waii, which specializes in using AI to generate code through natural language instructions. These acquisitions signal Salesforce isn't just defending against AI disruption - it's trying to lead the charge.
The crown jewel of this strategy is Agentforce, Salesforce's AI platform that builds autonomous agents to handle business tasks and streamline workflows. Annual recurring revenue from Agentforce exploded 330% year-over-year to $540 million, a growth rate that's caught analysts' attention. analysts noted they were "encouraged by its strong adoption in the customer service space" despite initial investor skepticism.
