Is the SaaS model disappearing faster than Salesforce can innovate?
CRM giant Salesforce failed to truly convince investors on Wednesday evening. Revenue rose 13% to $11.1 billion last quarter, while the company expects approximately 11% revenue growth for the full fiscal year 2027, in line with previous years. For a recovery in the share price, which has fallen 30% this year, a clear acceleration in growth later in the year would have needed to be visible, according to eToro market analyst Jean-Paul van Oudheusden.
Investors are increasingly questioning whether new AI software, such as Claude Mythos, is structurally putting pressure on the traditional SaaS model. Software companies like Salesforce have historically earned money per user (billing based on seats). That very model could be impacted if AI assistants take over more tasks from employees. This debate is playing out more broadly in the tech sector and is described with much dramatic flair as a possible "SaaSpocalypse."
Salesforce tries to shift the narrative
CEO Marc Benioff is meanwhile trying to reposition Salesforce prominently. According to him, AI is not reducing the need for software, but rather increasing complexity within organizations. AI agents need access to data, operational processes must be controlled, and autonomous processes must be monitored. Salesforce increasingly wants to be seen as an operational AI layer for companies, not just a classic CRM platform.
This is also reflected in the new financial reporting. Salesforce now splits its activities into two segments: Applications and Infrastructure & Data. The growth differences between the two are striking. Traditional application activities grew 7% last quarter, while Infrastructure & Data rose 23%. The latter segment clearly benefits more from AI-related investments.
Salesforce for investors
Yet investors are not yet convinced that the new AI strategy will pay off quickly enough. The comparison with giants like Amazon, Microsoft, and Google does not help. Those companies have shown a clear acceleration in growth in their cloud activities in recent quarters due to massive AI investments.
Within Salesforce, Agentforce in particular is supposed to become the new growth story. With it, the company wants to integrate AI agents directly into business processes and customer contacts. However, in that general, broader segment there are formidable competitors such as Microsoft, ServiceNow, and Snowflake.
The contrast with Snowflake was striking last night. That stock rose over 30% after quarterly results that convinced investors that AI is actually creating additional demand for data and AI infrastructure. For Salesforce, doubt remains greater for now. The market is still uncertain whether AI will ultimately generate more new revenue for Salesforce than it costs the classic SaaS model. Salesforce shares fell 2% in after-hours trading on Wall Street.
