$Salesforce.com(CRM)$ is expected to show a rise in quarterly revenue when it reports results on 29 May 2024 for the period ending 30 April.
Salesforce is expected to report a 10.9% increase in revenue to $9.147 billion from $8.25 billion a year ago.The company's guidance on 28 Feb 2024, for the period ended April 30, was for revenue between $9.12 billion and $9.17 billion. (SAL is based on Total Revenue).
If we looked at how Salesforce have been giving positive results for its past earnings, we might be looking at similar pattern this time, but what would be interesting to watch is their guidance and outlook for 2024, and how their Einstein sales have been doing.
What percentage of revenue have Einstein brought in for Salesforce? I will be sharing on how the stock price have behave before and after its past earnings in later section.
Salesforce AI a work in progress for customers
In March, Salesforce answered the queries of roughly 5,000 developers attending its TrailblazerDX conference to tackle the company's latest GenAI technology, including the new Einstein 1 Studio. The software suite comprises a trio of no-code tools for using and training AI models and developing a simple path for accessing their services.
While eager to embed AI in Salesforce software, customers acknowledged that it requires planning, time and work to make it useful in the company's sales, marketing and customer service applications.
This is important as companies especially enterprise are looking at how quickly or efficient can they implement AI into their business operations, this is important meaning if they require extra manpower with certain skillsets, then that would not align with most companies goals.
We also need to note that there are competition now from Microsoft and Google, and they can also do process automation, customer relationship management, so Salesforce would need to up their game to stay relevant and competitive.
Price and Cost Of Salesforce’s Ambitious AI Strategy
On 27 Mar 2024, almost 900 people gathered in a San Francisco conference hall dressed as Albert Einstein, setting a Guinness World Record for the 'Largest Gathering of People Dressed as Albert Einstein.' Salesforce Inc., which hosted the event, has embraced Einstein as a mascot for its AI features. The company paid over $20 million almost a decade ago to license Einstein’s image, revealing the substantial investment made in its AI strategy.
But actually how much revenue have Salesforce managed to gain with this $20 million spend, Salesforce has an engine much earlier than when AI hype was up, but it is not widely adopted. Then ChatGPT came, and there was much talks about ChatGPT and OpenAI.
So have they missed the timing of riding the AI wave at the right time? If we look at how media sentiment have been like for CRM and its peers, CRM is at a pretty low level.
Salesforce Price Target For May
The price target for May look optimistic, I think this is because of the positive expectation of its upcoming earnings report. But I think we need to look deeper into how the stock have been trading in recent weeks leading to its upcoming earnings.
Salesforce Experience Selling Right After Earnings?
Using the EMA and KDJ chart, I have observed that based on J value on the KDJ, there have been selling on and after the earnings report day, this had happened on 28 Feb 2024and 29 Nov 2023, this is quite unusual as both past earnings have recorded +0.06 and +0.08 in EPS estimates beat.
And after that, CRM start to trade sideway or range-bound. On both occasion, CRM is trading above the 50-day period. So for this upcoming earnings, I am expecting Salesforce might make a push upside before its earnings, if investors confidence increase.
Else we might see some selling as seen in the KDJ chart, it is currently experiencing a downwards movement.
Summary
For this upcoming earnings, I would think we need to look at how Einstein would be contributing to its revenue and whether this is a right AI strategy to move forward. From the way the stock is trading, it is currently trading below 50-day period, so this might present a good chance to buy.
But do exercise cautious and look out for price action today (28 May 2024), as CRM is current experiencing a downward trend.
Appreciate if you could share your thoughts in the comment section whether you think CRM stock price could give us a gap up after its earnings, or we will see selling pressure piled up?
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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