With investor expectations for a boost from artificial intelligence ebbing, Salesforce this week at its Dreamforce customer conference will tout the "Agentforce" platform — its next wave of AI products. Meanwhile, Salesforce stock has underperformed as revenue growth decelerates amid Wall Street hopes that AI-related revenue will materialize in 2025.
Salesforce is highlighting the new AI platform at its Dreamforce customer conference, which runs from Sept. 17 to Sept. 19.
Microsoft 365 Copilot Wave 2
Meanwhile, rival Microsoft on Monday hosts its own artificial intelligence event. At Microsoft 365 Copilot Wave 2, the company will focus on new features for business and productivity.
Introduced in early 2023, Microsoft 365 Copilot creates responses and drafts presentations. How much revenue Microsoft 365 Copilot has generated isn't clear.
In a pre-briefing on Sept. 12, Salesforce Chief Executive Marc Benioff said, "The third wave of AI is going to be about agents."
Since the emergence of generative AI in late 2022, Salesforce and other software makers brought to market conversational chatbot interfaces often called copilots. They offer them as add-ons to existing software products. But they've yet to produce much revenue as customers test the technology.
The Einstein copilot feature, for example, is a conversational AI assistant integrated within the user interfaces of Salesforce apps.
Salesforce says Agentforce is the next evolutionary step for AI copilots. The AI agent technology aims at automating routine business tasks. It is also designed to provide real-time time business insights and guidance.
Benioff says customers using early versions of Agentforce include Walt Disney, health care firm Kaiser Permanente and retailer Fossil. Also, publisher Wiley and restaurant firm Open Table.
Additionally, Benioff acknowledged that copilot AI technology has not delivered "customer value." He says Salesforce aims to turn on Agentforce deployments at 1,000 customers during next week's Dreamforce conference.
Salesforce Stock: Agentforce Coming In October
The AI agents will tap Salesforce's databases of customer information as well as data from partners such as Workday.
The Agentforce products will be rolled out in October. On its July quarter earnings call, Salesforce told analysts the Agentforce business model will be "consumption" based. That means customers will be charged based on usage.
Pricing has not been disclosed. Salesforce on the Q2 earnings call mentioned $2 per interaction as a possibility for complex queries.
Also, Salesforce generally garners subscription-based revenue based on "per seat" pricing. That is, charging customers based on the number of individual users that access their software.
Salesforce Stock: Analyst Views
Here's a sampling of analyst commentary on Agentforce from second quarter earnings reviews.
"Agentforce will translate into a threefold growth strategy going forward of selling apps, data and agent solutions," said Truist Securities analyst Terry Tillman. "We believe an inflection point could be at hand where an increased level of innovation, including the debut of Agentforce AI agent technology, could catalyze subscription revenue growth reacceleration moving into 2025."
Barclays analyst Raimo Lenschow said: "(Salesforce) believes Agentforce could garner more traction than existing copilot offerings as it does not need a trained rep to prompt it and is fully autonomous." Lenschow noted that "The team is still also still working on balancing the pricing structure to account for compute (costs) to protect the profit margins framework."
At Monness, Crespi, Hardt & Co., analyst Brian White is cautious. "With revenue growth dropping to a new low in a precarious macro environment, we found the unbridled, gen AI optimism permeating the Q2 call to be unconvincing," he said. He added that, "At Dreamforce, Salesforce is prepared to take the gen AI propaganda to new heights with a focus on its new Agentforce platform."
Competition From Microsoft, Meta
Meanwhile, Salesforce will have plenty competition. Microsoft, for example, has rolled out tools for AI agent creation and prototyping. Facebook-parent Meta Platform has launched AI Studio, which enables businesses to build custom agents.
On the Q2 earnings call, Salesforce also described an Agentforce trial with a large health care services customer. Salesforce said the AI agent resolved 90% of patient inquiries during the trial.
At Morgan Stanley, analyst Keith Weiss said that with the new Agentforce AI platform, Salesforce's strategy is to provide a complete solution for customers.
"Management asserts that customers are struggling to build proprietary, in-house gen AI solutions," Weiss said in a report. "Salesforce sees a major opportunity to deliver deeply integrated platform capabilities at scale, all with less complexity and at lower cost profiles."
Salesforce has been touting artificial intelligence since it introduced predictive Einstein tools for salespeople in 2016. But Salesforce has never disclosed AI revenue. In Q2, Salesforce total revenue climbed 8% to $9.33 billion.
In 2024, Salesforce stock has retreated nearly 5%. However, Salesforce is among AI stocks to watch.
According to IBD Stock Checkup, CRM stock currently has a Composite Rating of 72 out of a best possible 99.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Also, the best growth stocks have a Composite Rating of 90 or better.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
