Jim Cramer was on the call with Salesforce. Now you are ready to do something
Salesforce’s quarterly results didn’t convince critics that AI could be a friend, not a foe, to its business. But they undermined Jim Cramer’s confidence in the stock. “It’s worth staying long for Salesforce, and we will,” Jim said during Wednesday’s Morning Meeting. Earlier on CNBC, he said he would buy more shares if he was not banned. If Jim talks about a stock on CNBC, he must wait 72 hours before executing a trade. Shares of Salesforce rose nearly 1% as the business software maker reported a strong quarter on Wednesday. Revenue rose 13.3% year over year to $11.13 billion, beating street estimates of $11.05 billion, according to LSEG. Adjusted earnings per share came in at $3.87, beating the consensus estimate by 76 cents. Salesforce has been trying to counter the prevailing market narrative that AI poses an existential threat to its business. Bears say the per-seat business model is at risk as AI efficiencies force headcount reductions, and that AI coding tools will lead customers to replace other Salesforce tools with in-house applications. Several analysts, including Wells Fargo, UBS, Bernstein, and DA Davidson, cut their ratings on the stock or left it unchanged. But Jim is convinced that CEO Marc Benioff isn’t getting the credit he deserves as Salesforce quietly transitions to a consumption-based model. The strategy includes token pricing, where customers can use tokens across services as a more flexible way to pay for usage. He points to Salesforce’s AI model, Agentforce, as evidence of that change. Agentforce helps customers build AI agents that can automate tasks. Salesforce said the business closed 98 deals in the quarter, and annual recurring revenue (ARR) now sits at $1.2 billion. That’s a 205% year-over-year jump from $800 million in the fourth quarter. “Agentforce’s revenue is now over a trillion dollars, Jim. That’s amazing. And Agentforce is now in all of our products from sales to service,” Salesforce CEO Marc Benioff said on ‘Mad Money’ Wednesday evening. “No business software company does more than Salesforce does.” Jim compared Salesforce’s pivot to another software company, Snowflake, whose stock rose nearly 39% after earnings on Thursday. Not only did Snowflake, late Wednesday, deliver a quarterly hit and lift based on AI, but it also committed to spending six billion dollars on Amazon. “[Benioff is] to change his model again. He’s not just bragging about it.” (Jim Cramer’s Charitable Trust is a long CRM. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling his stock traded through Jim’s trust. On CNBC TV, you wait hours. 72 after issuing a trade warning before making a trade INVESTMENT STRATEGY INFORMATION IS SUBJECT TO OUR PRIVACY POLICY AND PRIVACY POLICY, NO REASON FOR YOUR OBTAINING ANY INFORMATION PROVIDED BY CONTACTING THE INVESTMENT CLUB. SPECIFIC RESULT OR GUARANTEED INTEREST.
