(Bloomberg) -- Results from Salesforce Inc. this week pose a key test for the stock and for what many believe is the next big thing in artificial intelligence: AI agents.
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The software giant is seen at the vanguard of this kind of tool, which is designed to handle multi-step processes on behalf of users without human supervision. It launched its Agentforce product in October and introduced a well-received update in December, meaning this report, due after the market close on Wednesday, will be key to the case for its adoption and potential.
A positive read could not only revive the stock, which has trended lower this year, but reassure investors about AI’s potential to drive growth and efficiency more broadly.
“AI agents are now at the forefront of the software trade, and this is the first quarter where we should see hard numbers,” said Clayton Allison, portfolio manager at Prime Capital Financial.
“People are questioning whether the capex spent on AI has been worth it, so if we see tangible results and monetization from Salesforce, that could suggest tech deserves its premiums. If it’s a bad print, that will be disappointing since so much growth has already been baked in.”
Shares fell 0.1% on Tuesday, on track for their fifth straight negative session.
Salesforce’s previous report came in better than expected on key metrics, thanks in large part to AI, sparking a rally that took shares to a record. However, it failed to build on that rally, and is down 16% since that December release.
Last week was the worst for the stock since August, and shares closed at their lowest since November on Monday. The stock is down almost 8% this year, underperforming both the broader market and an index of software companies this year.
Despite that slump, the company is seen as well positioned to deploy AI agents into its software for such functions as customer service, scheduling, and lead scoring. It has been aggressive with the strategy, hiring workers to sell the product even as it cuts jobs elsewhere.
AI agent tools are proliferating; OpenAI released a research-focused one earlier this month. However, Wall Street is positive on Saleforce’s ability to capitalize. Morgan Stanley sees it “in the right place for the shift towards Agentic Computing,” while Scotiabank wrote that checks “highlighted a clear uptick in customers expanding their spend with Salesforce” as a result of Agentforce, although it caveatted that near-term growth “is still an open question” as many customers remain in the testing stage.
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According to data compiled by Bloomberg, 75% of software companies have beaten earnings expectations this reporting season, while about 69% have for revenue. For the overall tech sector, the beat rates stand at 84% and 71%, respectively.
That, coupled with the newness of Agentforce and the stock’s recent underperformance, could mean that expectations are low going into this report, while recent management changes may temper how aggressive the company will be with its outlook.
As shares look like a relative bargain among megacap AI stocks, an upside surprise could be a catalyst. The stock trades at 27 times estimated earnings, almost half their 10-year average. It trades at a discount to both the S&P 500 tech sector index and the software index. The stock is 30% below the average price target, making for one of the highest implied returns in tech among the next 12 months.
“The multiple looks pretty reasonable given Salesforce’s stable and predictable growth, especially since you can bank on an inflection in the next couple of quarters from Agentforce,” said Eric Clark, portfolio manager at Accuvest Global Advisors, who expects the stock to top $500 over the next couple years, compared with its Monday close just above $308.
He stressed that while near-term results may not show much uplift from Agentforce, the long-term potential is strong, especially if low-cost AI models like China’s DeepSeek accelerate adoption of AI services and functions more broadly.
“Salesforce has always been sticky with its customers, and I think Agentforce is going to be like superglue,” he said. “It is going to build massive momentum, and even if it takes more time than the market hopes, I don’t think anyone doubts this will be a meaningful part of its business over time.”
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Microsoft Corp closed at its lowest since September on Monday, the latest sign of how the software titan has struggled in recent months. The stock fell 1% on Monday, after TD Cowen wrote the company has canceled some leases for US data center capacity, raising concerns over whether it’s securing more AI computing capacity than it needs in the long term. Shares are down almost 14% from a peak hit in July.
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President Donald Trump’s move to further decouple economic ties between the US and China rattled global investors, who had bet on a sustained rebound in Chinese stocks.
Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under Joe Biden to limit Beijing’s technological prowess.
DeepSeek has reopened access to its core programming interface after nearly a three-week suspension, resuming a service key to wider adoption of an AI model that’s proven remarkably popular since its emergence last month.
Elon Musk’s SpaceX is seeking to deploy Starlink satellite internet terminals to help accelerate an upgrade of the information technology networks that support the US Federal Aviation Administration’s national airspace system, according to people familiar with the matter.
Indonesia and Apple Inc. have agreed on terms to lift the country’s ban on iPhone 16s, said people familiar with the matter, paving the way to end a five-month tug-of-war that forced the US tech giant to raise its promised investment in the country to $1 billion.
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--With assistance from Subrat Patnaik.
(Updates to market open.)
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