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John M. Chase

Salesforce (NYSE:CRM) was in focus on Thursday after the cloud computing software giant reported strong fourth-quarter results and provided guidance for fiscal 2025, leaving many on Wall Street to see this year as "the year of the data cloud."

Shares rose fractionally in premarket trading.

"Strong demand for Data Cloud offering, which is now approaching $400M in [annual recurring revenue] (nearly +90% yr-yr)," Baird analyst Rob Oliver wrote in a note. "While macro environment remains challenging, strong trends in AI and data could be sources of upside this year."

Oliver reiterated his Outperform rating and boosted his price target to $355 from $310.

Stifel analyst J. Parker Lane also said 2024 will likely be the "year of the data cloud," as he maintained his Buy rating on Salesforce and bumped his price target to $350 from $330.

Looking to the next fiscal year, Salesforce expects to generate sales within a range of $37.7B to $38B, below the $38.65B that analysts were forecasting. Full-year earnings are expected to be between $9.68 and $9.76 per share, above the $9.61 per share estimate.

For the period ending Jan. 31, Salesforce earned an adjusted $2.29 per share as revenue rose 11% year-over-year to come in at $9.29B. Subscription and support revenue during the period rose 12% year-over-year to $8.75B, while service revenue came in at $2.16B. Platform and other revenue was $1.72B during the period, while marketing and commerce revenue rose 8.2% year-over-year to $1.287B.

Analysts had expected the Dow 30 component to earn $2.27 per share on revenue of $9.22B.

Salesforce also announced its first-ever quarterly dividend of $0.40 per share and boosted its share buyback program by $10B. The company also said that it had returned $1.7B to shareholders in the fourth-quarter in the form of buybacks.

Salesforce appears to be in a strong position when it comes to monetizing artificial intelligence, especially via its Einstein offering, which some on Wall Street believe could boost sales considerably.

"We believe [AI] is a major land grab opportunity that could significantly benefit CRM over the coming years and could increase overall revenue by $4 billion+ annually based on our estimates and field work by 2025," Wedbush Securities analyst Dan Ives wrote in a note. Ives maintained his Outperform rating and $325 price target.

Lane also expressed optimism around Salesforce's ability to generate revenue from AI in short order.

"We note that Einstein contributions in the guide are minimal, so early adoption has the potential to drive upside from the [high single digit] growth guide," Lane wrote. "We remain confident in the company's positioning in the nascent AI space and expect its early investments into building AI-powered solutions/models organically will begin to pay off as soon as FY25."

Excerpt from:
'The year of the data cloud:' Salesforce results, guidance impress Wall Street - Seeking Alpha