☁️ Salesforce: AI Cloud & Everything GPT
How the cloud software OG is shifting to an AI-first strategy
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Today at a glance:
Salesforce Q1 FY24 earnings.
AI Cloud & Everything GPT.
Key quotes from the earnings call.
Future developments to keep an eye on.
Marc Benioff, CEO of Salesforce (CRM), had this to say about AI recently:
“The coming wave of generative AI will be more revolutionary than any technology innovation that's come before in our lifetime or maybe any lifetime.”
As you can see, NVIDIA’s Jensen Huang is not the only CEO with a lot of enthusiasm for the rapid innovation taking over since ChatGPT opened the floodgates.
Salesforce is known for its Customer Relationship Management platform, a technology for managing all relationships and interactions with customers (existing or potential). The company is now venturing deeper into the AI territory by launching its new suite of products, dubbed the ‘AI Cloud.’ So today, we’ll cover some of these announcements and what they mean for investors.
This comes amidst a wave of significant announcements in the AI space by all hyperscalers, from Microsoft to Google. Salesforce’s AI Cloud is part of an ambitious drive to embed generative AI throughout the company's platform, an initiative that began earlier this year.
The new suite includes enterprise-ready tools that host and serve AI models from a broad array of partners, including Amazon Web Services (AWS) and AI research entities like OpenAI. This concerted push for AI integration positions Salesforce on a comparable footing with Amazon's Bedrock, which offers a blend of AWS-trained and pre-trained models from startup partners.
Yet, Salesforce's approach has a unique twist. The company has devised first-party models to power up capabilities such as code generation and business process automation within its ecosystem. That includes the products acquired in the past decade, from Slack to Tableau to MuleSoft. This promising endeavor carries the potential to reshape the functionality and efficiency of Salesforce’s flagship products, providing unprecedented AI-infused capabilities to its user base.
As the Software-as-a-Service OG, Salesforce has made it a habit to be early in significant seismic technological shifts, like the transition to the cloud. Last year, the company became the largest enterprise apps vendor by revenue, dethroning SAP.
Let’s look at the most recent quarter!
1. Salesforce Q1 FY24
Here is a bird’s-eye view of the income statement.
Revenue has two main components:
🧾 Subscriptions and support (~93% of overall revenue).
Sales (22%): Manage and automate sales process from leads to opportunities to billing.