By Zaheer Kachwala
(Reuters) - Shares of Salesforce fell over 3% before the bell on Thursday after a downbeat annual revenue and profit forecast raised questions about when the enterprise cloud firm would start to show meaningful returns on its hefty artificial intelligence bets.
Salesforce's top boss, Marc Benioff, has made a big effort in recent years to transition the firm beyond traditional cloud computing and toward data driven machine learning and generative AI, in a bid to take advantage of the rapidly evolving tech landscape.
But the company's weak annual revenue outlook sows doubt over the pace of monetization for Agentforce - its AI agent builder platform - as its business clouds and subscription revenue lag owing to slower spending from enterprise clients.
"Unfortunately for Salesforce, the focus (on Agentforce) is coming at the expense of the rest of the business which continues to decelerate," said Gil Luria, managing director at D.A. Davidson.
"Since Agentforce may not become a significant contributor for at least a year or two, that means Salesforce will experience even slower growth this year."
Outgoing CFO Amy Weaver said on Wednesday that the adoption cycle for Agentforce is early and the company is focused on deploying the software to customers, but sees "meaningful contribution in fiscal 2027."
"Management was explicit that subscription growth should benefit from Data Cloud contributions and a bit from Agentforce this year," Canaccord Genuity analysts said, but noted that it felt like "expectations had perhaps gotten ahead of themselves."
Investors have been at the heels of big tech firms including Microsoft and Meta to show returns on the billions poured into artificial intelligence.
Salesforce's fast-growing Data Cloud remains a bright spot for the company as it is also the driving force behind its agents.
Data Cloud and AI annual recurring revenue rose 120% last year which analysts have welcomed and said it could lay a foundation for growth acceleration going forward.
Salesforce's 12-month forward price-to-earnings ratio is 27.07 compared to Snowflake's 162.52 and ServiceNow's 55.23
If current losses hold, the company is set to wipe off over $9 billion from its market value.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shailesh Kuber)
