Salesforce Stock Could Set New Highs On ‘Amazing’ AI Demand

09 Nov 2024 by Peter Cohan · Forbes

SUN VALLEY, IDAHO - JULY 12: Marc Benioff, Chief Executive Officer of Salesforce, walks with other ... [+] attendees as they leave a morning session at the Allen & Company Sun Valley Conference on July 12, 2023 in Sun Valley, Idaho. Every July, some of the world's most wealthy and powerful figures from the media, finance, technology and political spheres converge at the Sun Valley Resort for the exclusive weeklong conference. (Photo by Kevin Dietsch/Getty Images)Getty Images

Salesforce stock has not produced the most exciting returns for investors over the last several years — but that is clearly changing.

How so? After peaking in November 2021, the stock began a long fall — bottoming out in December 2022, before recovering nicely to reach a new high in March 2024. Salesforce shares then fell again before mounting a strong recovery beginning in September — rising 34% to hit a record high on November 8, according to GoogleFinance.

The factor driving that excitement is client demand for Agentforce — an AI agent which is enjoying “amazing momentum,” CEO Marc Benioff said, according to Bloomberg.

Based on my interviews with companies using Agentforce and news that Salesforce is hiring a large number of people to seize the opportunity, Salesforce stock could keep hitting new records.

Agentic AI’s Growth Opportunity

Agentic AI is capable of performing tasks ranging from “checking a car rental reservation at the airport to screening potential sales leads,” the Wall Street Journal recently reported. Agentic AI is a global market expected to end 2024 with $31 billion in revenue and to grow thereafter at a 32% annual rate for the next few years, noted Emergen Research.

This does not surprise me. In Brain Rush, I speculated on the future of AI — including the emergence of autonomous agents. Such agents would plan and execute tasks, such as designing and delivering a marketing campaign that would iteratively query large language models to sense and respond to external feedback.

Agentic AI could become a killer app. “Intelligent agents in AI will change decision making and improve situational awareness in organizations through quicker data analysis and prediction intelligence,” wrote Tom Coshow, senior director analyst with Gartner’s technical service providers division, in a Gartner report about intelligent agents in AI featured in Network World.

“While you’re sleeping, agentic AI could look at five of your company’s systems, analyze far more data than you ever could and decide the necessary actions,” Coshow added.

Salesforce Bets On Huge Demand For Agentforce

Salesforce is very optimistic about customer adoption of this service. “Agentforce will be the number one supplier,” said Benioff in an interview with Fast Company. “I think we’ll have more than a billion agents running from Salesforce within the next 12 months. Even at Dreamforce, I got 10,000 customers hands-on with Agentforce,” Benioff added.

To be sure, the company faces Agentic AI competition from Microsoft, Salesforce’s business model strikes me as more customer friendly. While Microsoft charges customers based on the number of employees who use its software, customers only pay Salesforce when they use the product — at an initial price of about $2 per agent conversation, reported Bloomberg.

Benioff criticized Microsoft’s Copilot as “disappointing” in an October post on X — a sentiment about which I wrote in Brain Rush.

Microsoft begged to differ with Benioff. “Every customer is at a different place in their journey, but overall we are hearing something quite different from our Copilot for Microsoft 365 customers,” Jared Spataro, Microsoft corporate vice president, told CNBC.

“Last quarter alone, we saw a customer increase of over 60%, and daily users have more than doubled – a clear indicator of Copilot’s value in the market. When I talk to CIOs directly and if you look at recent third-party data, organizations are betting on Microsoft for their AI transformation,” Spataro added.

To turn demand for Agentforce into significant revenue, Salesforce is hiring 1,000 more people. “Agentforce became available just two weeks ago and we’re already hearing incredible feedback from our customers,” Benioff said in a message released by Bloomberg.

How Agentforce Is Making Business More Productive

Agentforce boosts several companies’ productivity.

An example is BACA Systems, machine manufacturer based in Orion Township, Mich. that used Agentforce to increase its customer service productivity. BACA now handles “a growing volume of service calls without adding additional human staff,” said Andrew Russo, enterprise architect at BACA, in an interview with the Journal.

The educational publishing giant Wiley boosted its customer service productivity thanks to Agentforce. More specifically, Wiley enjoyed “a more than 40% autonomous resolution rate for customer inquiries during its busy back-to-school season,” reported VentureBeat.

Bullhorn, a Boston-based provider of software for staffing firms, sees AI agents as a way to boost revenue and profits for the company’s clients. Bullhorn has partnered with Salesforce to offer an Application Tracking System (ATS) and complex billing solution to recruiting firms. To-date, the work done through Bullhorn's Middle Office billing solution totals over $24 billion worth of invoices, according to a Bullhorn statement.

Bullhorn also see tremendous value in Agentforce. “We are moving to an agentic strategy to search for candidates and match them to a company’s job requirements,” Bullhorn President and Chief Operating Officer Matt Fischer told me in an October 28 interview.

“The agent can resolve a common problem for job candidates: Many apply for a job and never talk to a recruiter. A company can get as many as 10,000 applicants for a job. The agent scores each candidate based on their fit with the requirements. The agent then interviews the best candidates who are selected to talk with a recruiter. What’s essential is orchestrating the agents — which is a natural for Agentforce,” Fischer added.

Eliassen Group, which uses Salesforce’s ATS and Bullhorn’s Middle Office, is also excited about agentic AI’s potential. “This is a competitive advantage,” Eliassen’s Chief Information Officer Rob Waddell told me in an October 28 interview.

"Universal search and match will be getting better. It has embedded AI for finding potential matches in our 20 million candidate database. As it starts to learn our preferences, it can pick the top 10 candidates. We have metrics for time to submit, time to fill, and placement percentage. Agentforce could help us improve our performance on these measures by talking to a bot and screening clients for a potential new enterprise customer,” Waddell added.

Salesforce stock has just about reached its average price target of $322, according to MarketWatch. If investors are underestimating how much revenue Agentforce could add to Salesforce’s top line, that target price could be too low.