The tech sector’s obsession with artificial intelligence is creating a stark dividing line: companies with convincing AI strategies and those struggling to prove their relevance. Salesforce, the customer relationship management giant, finds itself firmly in the latter category despite CEO Marc Benioff’s persistent efforts to reshape this perception.
During Wednesday’s fiscal second-quarter earnings call, Benioff once again confronted skeptical investors who remain unconvinced that Salesforce can successfully transform its traditional cloud software business into an AI powerhouse. Despite beating Wall Street expectations with $9.33 billion in quarterly revenue (up 8.5% year-over-year) and raising full-year guidance, the company’s shares initially slipped 4% in after-hours trading.
“Every customer conversation now begins with AI,” Benioff emphasized repeatedly during the call. “Our Einstein AI platform is processing over 1.5 trillion predictions per week, demonstrating real-world adoption across our customer base.” This metric represents a 50% increase from the 1 trillion weekly predictions Salesforce reported just three months ago.
Behind these impressive numbers lies a more complex reality. While Salesforce’s earnings exceeded analyst expectations by $130 million, revenue growth continues to decelerate compared to its pre-pandemic trajectory when 20-25% annual growth was standard. The 8.5% growth this quarter, though solid by current market standards, represents the new normal for a company that once defined hyper-growth in the SaaS sector.
Bernstein analyst Stacy Rasgon captured the market sentiment in a recent research note: “Salesforce remains caught between two narratives – a mature software giant with moderating growth prospects versus an AI-transformation story still in its early chapters.” This tension explains why the company trades at roughly 6.5 times forward revenue, well below the 10-12x multiples it commanded during its high-growth phase.
Salesforce’s AI strategy centers on Einstein, its embedded intelligence layer that powers predictive capabilities across its product suite. The company recently expanded this with Einstein Copilot, a conversational AI assistant, and Einstein Trust Layer, which addresses data privacy concerns. According to COO Brian Millham, these additions have contributed to several “nine-figure deals” in the past quarter.
Federal Reserve economic data indicates that U.S. companies are increasing their technology investments, with enterprise software spending up 8.7% year-over-year as of July. This broader trend supports Salesforce’s growth trajectory, even as the company faces intensifying competition from Microsoft, Oracle, and specialized AI startups.
“We’re seeing customers consolidate their tech stacks while simultaneously investing in AI capabilities,” noted Amy Weaver, Salesforce CFO. “This plays to our advantage as the only complete CRM solution with integrated AI functionality.” Weaver highlighted that operating margins reached 33.2% for the quarter, continuing the company’s focus on profitability that began after activist investor pressure in 2023.
The changing macroeconomic landscape presents both opportunities and challenges. Recent Commerce Department data shows business investment in software increasing 7.9% annually, outpacing broader economic growth. However, Goldman Sachs analysts warn that enterprise tech spending could moderate in early 2026 as companies assess the returns on their AI investments.
Financial Times reporting indicates that corporate America’s AI spending has been concentrated among the largest enterprises, with mid-market adoption lagging. Salesforce aims to bridge this gap with its “AI for Everyone” initiative, which offers scaled solutions for companies of various sizes – a strategy Benioff believes will drive growth through 2025.
“The AI transformation isn’t just for tech giants with unlimited resources,” Benioff stated. “We’re democratizing these capabilities for organizations of every size, in every industry.”
Critics point out that Salesforce faces significant challenges in differentiating its AI offerings in an increasingly crowded market. The recent Dreamforce conference showcased impressive capabilities, but Bloomberg Intelligence analyst Anurag Rana noted that “Microsoft’s integration of OpenAI technology across its Dynamics 365 platform creates competitive pressure in the CRM space that cannot be ignored.”
Salesforce’s acquisition strategy, once a hallmark of its growth approach, has notably slowed since the controversial $27.7 billion Slack purchase. When asked about future acquisitions, Benioff remained noncommittal: “We’re focused on organic growth and integration of our existing assets, but as always, we’ll evaluate opportunities that align with our strategic vision.”
The company’s leadership has pivoted from growth-at-all-costs to balanced financial management, increasing share repurchases to $10 billion annually while maintaining operating margins above 30%. This approach has placated some investors but left others questioning the company’s long-term growth ceiling.
As Salesforce navigates this transition period, industry observers remain divided. “Salesforce has the customer relationships and data advantages to become an AI leader, but execution will determine whether they can translate this potential into sustainable growth,” said Dan Ives, Managing Director at Wedbush Securities.
For now, Benioff and his team continue making their case to investors that Salesforce belongs in the AI winners’ circle. Whether the market ultimately agrees will depend on translating AI enthusiasm into accelerating growth metrics over the coming quarters.
