Salesforce's latest quarterly results have raised concerns among investors, with the cause appearing to be the slower-than-expected monetisation of its AI initiatives.

Salesforce’s Q3 earnings report reported revenue of between £10.24 billion and £10.29 billion, with the midpoint just falling below Wall Street's average estimate, according to data compiled by LSEG.

Earlier this week, the cloud software provider announced a $20 billion increase to its existing share buyback program, bringing the total authorised repurchase amount to $50 billion.

However, the move wasn’t enough to keep investors’ hopes up, sending shares dropping over 5 per cent in extended trading following the release of the earnings report. The sell-off continued into the next morning, with shares down nearly 7 per cent on 4 September.

Salesforce has invested heavily in AI, particularly with its Agentforce platform which is designed to automate tasks and improve margins, with increasingly intense pressure from investors to deliver returns.

Last week, chief executive Marc Benioff revealed that AI now handles between 30 and 50 per cent of the company's work and has led to 4,000 job cuts in customer support, a bold move that has yet to translate into boosted revenue growth.

Melissa Otto of S&P Global's Visible Alpha told Reuters she noted growing frustration among investors about the time it takes to see meaningful returns from AI.
"Investors may feel a sense of frustration, especially as they contemplate the timeline for adequate returns on AI investments," Otto told Reuters.

The company recently acquired Informatica for $8 billion, an American software company specialising in data management, particularly for enterprise environments, offering a wide range of software products for data integration, data quality, and data governance. 

The acquisition aims to enhance Salesforce's database, which the company says is critical to the implementation of agent AI, marking the next phase of Salesforce's AI-driven growth.

The AI boom has significantly impacted the technology labour market, as companies prioritise AI-focused roles whilst using the technology to reduce costs. Other tech firms have recently announced workforce layoffs.

In June, Microsoft implemented another round of job cuts, eliminating more than 300 positions just weeks after announcing its largest workforce reduction in years.

The latest cuts affected 305 employees in Redmond, according to a filing with the Washington state Employment Security Department on Monday. This brings Microsoft's total reported layoffs in its home state to nearly 2,300 in recent weeks.

A Microsoft spokesperson confirmed that these job eliminations are in addition to the workforce reduction announced last month, which affected nearly 3 per cent of the company's global workforce, or approximately 6,000 employees.

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