Why Salesforce Stock Fell 8.5% This Morning

Key Points

• Salesforce stock fell as much as 8.5% despite beating second-quarter earnings and revenue estimates by solid margins.

• The company's AI initiatives are replacing customer support roles, but those workers are being switched to sales and marketing rather than being laid off.

• CEO Marc Benioff's promise to replace half of customer support with AI agents won't translate into huge cost savings.

• 10 stocks we like better than Salesforce ›

Shares of Salesforce (NYSE: CRM) took a significant hit on Thursday. Following the company's release of second-quarter results, the stock fell as much as 8.5% in the morning session. By 11:30 a.m. ET today, Salesforce had recovered to a 5.7% overnight price drop.

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Another earnings beat for Salesforce, but wait -- there's more

Wall Street's average analyst had expected second-quarter earnings to rise about 8.6% year over year, landing near $2.78 per share. Revenue was targeted at roughly $10.1 billion, reflecting an 8.7% increase. The enterprise software giant exceeded the consensus analyst targets across the board, posting earnings of $2.91 per share on sales of $10.2 billion.

Looking ahead, management set full-year guidance targets just above the current analyst projections. So it was a beat-and-raise performance, but the stock still took a tumble.

Why investors wanted more from Salesforce's AI moves

Salesforce investors were probably looking for stronger guidance targets. After all, CEO Marc Benioff recently said that his company is removing roughly half of its customer support staff in favor of artificial intelligence (AI) tools. Specifically, deploying agentic AI systems to support human customer service specialists can deliver top-notch support outcomes at a faster pace and lower cost.

But this report highlights how the company isn't exactly laying off that redundant support staff. Instead, the workers are being redeployed into sales and marketing operations, where the human touch makes a bigger difference these days. So, if you were hoping for a large cost-cutting effect from Salesforce's agentic AI moves, the reported financials told a different story.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.