Salesforce touts AI momentum, but software space faces headwinds

Yahoo Finance Video y Julie Hyman

December 5, 2025

In this video:

CRM

-0.07%

Salesforce (CRM) stock gains after reporting mixed third quarter earnings results, where the company lifted its outlook and highlighted agentic AI adoption.

CFRA Research senior vice president and equity analyst Angelo Zino joins Market Catalysts to talk about the dynamics impacting Salesforce, including the company’s AI efforts, as the broader software as a service (SaaS) space faces pressures.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Julia

I want to talk a little bit about this stock action first of all because it is interesting. It saw a little more positive. This was seen sort of initially as, okay, they’re they’re starting to make some progress here on the AI front, but now the shares are barely higher. What what do you think this sort of second blush read here is?

00:36 Speaker B

Yeah, Julia and and thanks for having me. Uh when you kind of look at the shares here, you mean you’re right. I mean, it it had a nice pop here after hours. You actually look at the quarter, the numbers, um you know, I I thought it was a a pretty good quarter overall. Um as far as the, you know, the top line numbers are concerned in the actual October quarter, relatively in line. But when you actually kind of start drilling down, you gave some of the agent force numbers and and that’s really what the the street is eyeing at this point in time. They want to see more momentum coming from their AI offerings. Um and we saw a really good sequential growth from agent force of uh north of 50%, you know, increase uh sequentially in terms of the the bookings and um even, you know, some nice usage numbers in terms of the tokens generated here from um agent force. The problem is, um you you alluded to those numbers there which were great and and the, you know, the year over year increases, but they’re coming off very very low numbers, right? And despite the fact that you’re signing these contracts and these bookings, um the problem is it’s going to take time before you actually ramp up, right?

01:45 Speaker B

I mean, you’re getting these these contracts signed. You’re now going to have to um, you know, get the users actually creating these agents, um start testing them out, and before you actually fully ramp these new customers, it’ll take several quarters out. In the meantime, you’ve got this kind of bearish negative um commentary on the broader SAS landscape, which is why you’re seeing these, you know, I guess, uh profit taking on any type of, you know, pop in the shares.

02:29 Julia

Well, and okay, so let’s um take that part of it, right? Because you know, the the broader SAS landscape software as a service is most of their business as you point out, right? It like people are betting on the growth of this still relatively, on a relative basis, small part of the business. So what is happening with the broader SAS spending landscape and what effect is that having on Salesforce?

02:59 Speaker B

Well, listen, I we’ve seen overall SAS growth trends uh decelerate, you know, for for the last two plus years. I mean, in the in a post- pandemic world, um you know, there’s definitely, you know, uh I’d say a bit up in terms of uh purchases during the pandemic. You’re now kind of in this environment where growth rates have decelerated. Um a number of factors are definitely going on here. You’re getting more enterprises that have to um scrutinize their budgets and find um exactly how they want to leverage um their spending. And specifically they are spending more on on AI, but SAS vendors have to compete against potentially, you know, a number of these enterprises basically, you know, taking these models and and having it do it your self self approach um internally. You’re of course having, you know, a landscape where the the jobs market, the jobs picture isn’t as great um as maybe one would hope for. And as a result, see growth, um you know, comes into question here, especially as AI AI AI productivity improvements continue to take place here over the next couple of years. So you have those headwinds um and uncertainties about the the SAS landscape really kind of um really you know, taking center stage and given the uncertainties there in the market, um the street really is taking a wait and see approach across the entire SAS landscape.

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