Salesforce (CRM) stock has been riding the artificial intelligence hype train ahead of its second quarter earnings expected Wednesday after the bell.
Salesforce stock is up over 61% year to date, as the company has invested in the “AI wave” in tech.
Revenue and operating margin results will be central to Wall Street’s discourse around Salesforce following the software giant’s Q2 results, but something else will also be dominant in conversations this cycle — AI.
Salesforce has made substantial investments in AI, and investors are going to want to see results sooner rather than later.
“What people are looking for is kind of the shift,” Tematica Research chief investment officer Chris Versace told Yahoo Finance Live. “The key here is to go from: Is this the new new thing or is it the real real thing? That’s really what investors want to understand. To some extent … we got a little head-faked on some promises that just really haven’t delivered relative to the hope or hype, if you will.”
The earnings rundown
Here are the key numbers that Salesforce is expected to report, according to Bloomberg data:
Revenue: $8.53 billion estimated
Adjusted EPS: $1.90 estimated
Adjusted operating margin: 28.2% estimated
Free cash flow: $445.1 million estimated
Additionally, keep an eye on the revenue breakdown. Salesforce breaks out its revenue by sales and subscriptions.
What analysts are saying pre-earnings:
“While the macro is not roses and rainbows and CRM is still battling through various headwinds, overall we saw stronger cross-sell activity this quarter from our checks and particular strength out of the Tableau front with a number of larger more transformational suite wide deals inked during the quarter. We also believe Benioff & Co. is making major strides around integrating Slack on the back-end into the broader CRM suite and this could fuel some major collaboration deals we believe as the pipeline is finally starting to build on this key acquisition.” –Dan Ives, Wedbush
“Our CRM survey & checks indicate the demand environment remains sluggish. Expectations are low for F2Q due to mixed demand checks and relatively tough comps. The focus will be on whether CRM can deliver upside to the 28% F24 margin guide. We expect commentary on restructuring and AI.” –Brent Thill, Jefferies
“It was an interesting quarter for CRM with a heavily marketed, yet relatively underwhelming AI event in June, organizational changes and a surprise price increase announcement towards the end of the Q. Our quarter end fieldwork was decidedly mixed.” –Tyler Radke, Citi
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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