Salesforce Soars 8% After-Bell on Strong AI-Driven Revenue Outlook

Salesforce Revenue Outlook and AI Adoption

Salesforce Inc. reported a robust revenue outlook for the current period, exceeding analysts' expectations. The company projected revenue of $11.1 billion to $11.2 billion for the period ending in January, up from $10.9 billion anticipated by analysts. This forecast reflects strong adoption of Salesforce's AI tools, particularly in data integration and automation.

The company also highlighted a 15% increase in current remaining performance obligations, outpacing the 10% rise analysts had projected. This growth is partly attributed to the recent acquisition of Informatica, a data integration software company, for $8 billion. The performance obligations are expected to include 4 percentage points from Informatica, indicating the deal's immediate impact on Salesforce's financials.

Salesforce CEO Marc Benioff emphasized the momentum of AI-focused products like Agentforce, which automates tasks such as sales development and customer service. The company noted that it had closed over 9,500 paid deals for Agentforce since its launch, a significant jump from 6,000 in the previous quarter. Despite the progress, some analysts caution that broader adoption is still limited by customer confusion over pricing and data disorganization.

How Markets Reacted

Salesforce's shares gained approximately 8% in extended trading after closing at $238.72 on Wednesday. This positive market reaction followed the company's better-than-expected revenue forecast and strong performance in its AI division. However, the stock has declined 29% this year as investors remain wary of AI's disruptive potential in software markets.

In the fiscal third quarter, Salesforce reported $10.3 billion in revenue, up 8.6% year-over-year. Earnings, excluding certain items, came in at $3.25 per share, beating the $2.86 per share analysts had expected. The company also reported current remaining performance obligations of $29.4 billion, slightly above the $29.1 billion forecast by analysts.

What Analysts Are Watching

Despite the strong numbers, analysts remain cautious about the long-term adoption of AI tools like Agentforce. Derrick Wood of TD Cowen noted that customer confusion and disorganized data are key barriers to scaling AI usage. Meanwhile, Salesforce has reported $1.4 billion in annual recurring revenue for its AI-focused division, indicating solid early traction.

The company's broader transformation from a high-growth software firm to a more value-focused business is also under scrutiny. In 2025, Salesforce achieved a free cash flow margin of 33%, up from 20% in 2023. This shift has allowed the company to fund dividends and buybacks, reducing its share count by 3.9%.

Looking ahead, Salesforce faces the challenge of convincing enterprise customers to fully embrace AI-driven automation. While the company has been transparent about its progress, including revealing contract values, adoption remains a gradual process. For example, at the end of the second fiscal quarter, Salesforce reported $440 million in annual recurring revenue from agentic AI products, a 400% increase from the prior year.

Risks to the Outlook

One major risk for Salesforce is the competitive landscape in AI. Google's Gemini AI has shown impressive performance gains and has drawn attention from key industry figures, including Salesforce's own CEO. While Google's AI has not yet matched ChatGPT in market share, the rapid advancement of AI tools across the tech sector suggests continued pressure on Salesforce to innovate and simplify its offerings.

Another risk lies in the broader economic environment, which has dampened consumer spending in key markets. Salesforce reported that U.S. Black Friday shoppers spent more on average but purchased fewer items, a trend attributed to rising prices and economic uncertainty. The company estimated that AI influenced $73 billion of global sales during the Thanksgiving-to-Black-Friday period, up from $60 billion the prior year.

Despite these challenges, Salesforce's recent collaboration with AWS and Google Cloud to simplify multicloud networking could provide a strategic advantage. The new solution allows for faster and more secure data movement between clouds, supporting AI and analytics workflows. This move could help Salesforce strengthen its position in data-driven industries, where trusted data integration is essential for AI adoption.

What This Means for Investors

For investors, the outlook remains cautiously optimistic. Salesforce's guidance for the current quarter shows strong top-line growth and profitability, but the company must continue to demonstrate scalable AI adoption to justify long-term value. The stock's 8% post-earnings gain suggests that investors are beginning to see promise in the AI push, but the 29% year-to-date decline reflects lingering concerns about competition and execution risks.

In the near term, Salesforce's ability to maintain its 15% growth in performance obligations will be key. The company's $41.45 billion to $41.55 billion revenue forecast for full-year fiscal 2026 indicates continued confidence in its strategy. However, if AI adoption slows or customer confusion persists, the long-term growth narrative could come under pressure.