Salesforce (CRM.US) recently released quarterly revenue guidance that fell short of market expectations, indicating that its AI products have yet to deliver anticipated market returns amid fierce competition from emerging artificial intelligence companies. The company announced on Wednesday that revenue for the quarter ending in October is expected to reach $10.2 billion to $10.3 billion. This figure falls slightly below Wall Street's average expectation of $10.3 billion. Current remaining performance obligations, a metric for measuring order volume, are projected to grow "slightly above" 10%, essentially in line with analyst predictions.

As calls for AI to disrupt the traditional software industry intensify, investors are increasingly concerned that established software companies will be replaced by AI newcomers. Software companies like Salesforce that charge based on user count face the greatest skepticism—the market widely believes that AI technology will take over existing product functions, leading client companies to reduce their human resource investments.

Barclays analyst Raimo Lenso noted in a post-earnings report: "Investors need to focus on specific operational data for Agentforce and expect next month's Dreamforce conference to bring more positive developments." This AI tool, launched at the end of last year, can autonomously complete tasks such as sales development and customer management, and has currently signed over 6,000 paying customers. In May, the company disclosed that the tool generated $100 million in annual recurring revenue, but this figure was not updated in the latest earnings report.

Chief Financial Officer Robin Washington stated in a post-earnings interview that large enterprises and regulated industries remain cautious about deploying AI tools and need time to feel comfortable adopting them. She revealed that Salesforce has added more pricing options and hired additional sales personnel to drive adoption of the tool.

Following the earnings announcement, Salesforce stock plummeted 5.5% in after-hours trading, bringing its year-to-date decline to 23%. Morgan Stanley analyst Keith Weiss noted in a pre-earnings preview that this reflects "continued intensification of market concerns about AI disrupting traditional software."

Despite investor concerns, Salesforce CEO Marc Benioff remains confident about the prospects for the Agentforce product. Benioff stated during an analyst call: "The number of customers moving from trial to full deployment surged 60% quarter-over-quarter, with application scenarios and usage scale continuing to expand. This signals that our industry is entering the most transformative era in history. Nothing in my entire career has excited me as much as this."

Notably, the first analyst question during the earnings call directly addressed the disruptive challenges posed by AI. Goldman Sachs analyst Kash Rangan questioned the defensibility of the subscription-based software business model under the Software-as-a-Service (SaaS) framework. Benioff responded: "There's this strange narrative that enterprise SaaS, applications, and similar businesses will disappear. Admittedly, nothing lasts forever, but looking at the actual situation of managing my own business and how customers operate theirs—I simply cannot think of anything that could replace them."

Second-quarter fiscal 2025 results showed Salesforce reported revenue growth of 9.8% year-over-year to $10.2 billion, compared to analyst expectations of $10.1 billion. Current remaining performance obligations increased 11% to $29.4 billion. Adjusted earnings per share came in at $2.91, beating analyst expectations of $2.78. The company's Data Cloud and AI division generated $1.2 billion in annual recurring revenue.

Additionally, Salesforce announced an expansion of its share buyback program by $20 billion, bringing the total program size to $50 billion. During the call, Benioff also indicated that Salesforce will invest more effort in developing IT service management-related products. This move could put the company in more direct competition with industry leader ServiceNow (NOW.US).

In May, Salesforce announced plans to acquire data software company Informatica (INFA.US). Washington revealed during the call that the transaction is expected to close in the January 2026 quarter or slightly later.