Salesforce trumpeted artificial intelligence initiatives at its Dreamforce customer conference this week amid the rise of generative AI. But how soon new AI products will accelerate revenue growth for CRM stock is still unclear, analysts say.
At Dreamforce in San Francisco, Salesforce Chief Executive Marc Benioff announced the launch of the Einstein 1 platform and Einstein Copilot feature. Copilot is a conversational AI assistant that is integrated within the user interfaces of all Salesforce apps.
In addition, Salesforce announced new cloud computing-based services targeting the life sciences market.
"Our sources say initial AI solutions are immature and a broader monetization wave is pushed out till 2024/2025," Jefferies analyst Brent Thill said in a report.
He added, "(Salesforce) partners noted they have received inbound interest from customers for educational meetings around AI, but that has not translated to orders. They noted that it is still early in the AI monetization journey."
Salesforce AI Pricing Mix
Analysts expect Salesforce to use a mix of subscription and consumption-based pricing.
"We believe the company is developing a large-scale approach to generative AI and other AI innovations as they come along," Truist Securities analyst Terry Tillman said in a report. "We anticipate both fixed and consumption-based revenue monetization opportunities to progress across large swathes of the existing Salesforce platform and various cloud products."
At Evercore ISI, analyst Kirk Materne said in a report: "In general, the interest level around AI is high but investors are going to need patience as most of the products won't be generally available until mid-2024. The real focus right now is on the data cloud."
While Microsoft is aligned with startup OpenAI, Salesforce is working with several developers of large language models. Large language models provide the building blocks to develop AI applications around company data.
On the stock market today, CRM stock fell 1.3% to close at 218.80. Salesforce stock has advanced 66% in 2023.
Improving profit margins boosted CRM stock this year. But analysts are modeling only 11% revenue growth in 2024 and 2025.
CRM Stock: Technical Ratings
Salesforce stock recently forged an entry point of 228.79 from a cup base.
According to IBD Stock Checkup, CRM stock owns a Relative Strength Rating of 93 out of a best-possible 99. The best stocks hold ratings of 80 and above.
In addition, Salesforce stock holds an Accumulation/Distribution Rating of B-. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying while E means heavy selling.
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