Customer relationship management software maker Salesforce (CRM) is cutting 1,000 roles and focusing on hiring more sales personnel to accelerate its AI (artificial intelligence) ambitions. The news was first reported by Bloomberg, citing people familiar with the matter. CRM stock reacted positively to the news, rising 1.6% in extended trading yesterday.
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CRM Focuses on AI Ambitions
Salesforce is shifting gears toward the success of its AI ambitions, particularly of its generative AI agent, Agentforce. In December, CEO Marc Benioff mentioned that the company had closed more than 1,000 deals for Agentforce, which creates virtual AI agents to run routine tasks such as answering customer queries and evaluating sales opportunities.
Salesforce is making these job cuts as it begins its new Fiscal year. Last year too, CRM cut some 1,000 roles in two rounds of layoffs. The affected employees are not getting fired, meaning they will be able to shift to other jobs internally. There is no information about the exact roles and divisions that will be impacted in this round.
While Salesforce is determined to scale its AI business, it plans to do so by keeping its margins and expenses in check. The company underwent severe pressure from activist investors in 2023 and is abiding by its pledge to maintain profitability and share price appreciation. A lot of American big tech companies have already announced layoffs this year, including Amazon (AMZN), Microsoft (MSFT), and Meta Platforms (META).
Insights from TipRanks’ Bulls Say, Bears Say Tool
Salesforce is expected to report its Q4 FY25 results at the end of February. Ahead of the results, analysts have differing opinions on the stock.
According to TipRanks’ Bulls Say, Bears Say tool, bulls are encouraged by CRM’s leading market position, supported by a 22.1% share globally, the release of Agentforce, and its subscription model that ensures recurring revenues.
On the other hand, bears are concerned about the highly competitive market, global macroeconomic headwinds that impact customer’s CRM spend, and slowing revenue growth.
Is CRM a Good Buy Right Now?
Despite the success of the Agentforce product, analysts remain divided on Salesforce stock’s trajectory due to the reasons discussed above. On TipRanks, CRM stock has a Moderate Buy consensus rating based on 32 Buys, seven Holds, and two Sell ratings. Also, the average Salesforce price target of $396.94 implies 17% upside potential from current levels. In the past year, Salesforce stock has gained 18.4%.
