How to Boost Your Stock Price? Say AI...

What Happened?

Want to give your stock price a boost?

Company CEOs know what to do.

Make a big deal about artificial intelligence (AI) in the quarterly report…

And hey presto! The stock gets a nice boost.

The question is whether the promise of AI will actually turn into real revenue and profits.

Why it Matters

Salesforce Inc. (CRM) is the latest company to benefit from this trend.

As reported by Bloomberg News:

‘Salesforce Inc. (CRM) shares hit a record high on Wednesday after the company reported better-than-expected quarterly revenue, boosting hopes for the company’s much-hyped artificial intelligence strategy.

‘Sales increased 8.3% to $9.44 billion in the period ended Oct. 31, the company said Tuesday in a statement. Analysts, on average, estimated $9.35 billion, according to data compiled by Bloomberg. Adjusted operating margin, a measure of profitability, was 33.1%, compared with an average estimate of 32.2%.’

The stock gained as much as 10% during intraday trading.

You can bet your bottom dollar the stock didn’t rise on the small increase in sales. And it didn’t rise due to the small miss on per-share earnings — analysts expected $2.44 per share, the company actually reported per share earnings of $2.41.

It was purely on the promise of increased revenue from AI.

And where does it expect that AI revenue to come from? The company has launched a software add-on called ‘Agentforce’.

In short, companies that use the Agentforce product in their customer relationship management offering will pay Salesforce $2 per AI agent conversation. But the Agentforce service isn’t just customer service, it’s about initiating and closing sales through ‘chat’ functions.

How it Affects You

If a product line such as Agentforce really can take off, it truly could mean the AI revolution has only just begun.

Right now, it’s difficult to see how AI is helping businesses grow, rather than just helping them cut costs.

With cost-cutting, there’s only so much a company can cut. But when it comes to revenue growth, that’s a different story.

If AI can help both Salesforce and its customers grow revenue, it will take the AI story from being a predominantly hardware story to being more of a software and consumer story.

The next 12 months could truly be make or break for AI.