Salesforce Inc. (NYSE:CRM) and Palantir Technologies Inc. (NYSE:PLTR) are leading what Wedbush Securities Managing Director Dan Ives describes as an "AI revolution" in the enterprise software industry, with Oracle Corp. (NYSE:ORCL) set to benefit from the transformation in 2025, Ives said in an interview on Tuesday.
What Happened: Following Salesforce's latest earnings report, Ives described the quarter as "Goldilocks," in a CNBC interview highlighting the company's stronger-than-expected top-line performance and revenue guidance.
Salesforce reported third-quarter revenue of $9.44 billion, with remaining performance obligations up 10%, despite missing bottom-line estimates.
"This is a phenomenal balance of growth," Ives said, dismissing concerns about the earnings miss. "Right now you want to see them focus on spending, especially when it comes to what they're building out from an AI perspective."
Salesforce's Agent Force initiative could generate "$5-6 billion a year" in revenue, according to Ives, who sees "massive upside" for the company's stock. The enterprise software giant's shares closed at $331.43, up 0.13% on Tuesday.
Why It Matters: Meanwhile, Palantir Technologies has emerged as a frontrunner in the AI transformation. The company's stock surged 6.88% to close at $70.96 after receiving FedRAMP High Authorization for its Federal Cloud Service, expanding its capability to serve U.S. government agencies.
Ives emphasized that the AI revolution extends beyond the "Magnificent Seven" tech giants, affecting various sectors including software, cybersecurity, and storage. "The biggest tech trend in the last 40 to 50 years," he noted, suggesting investors are comfortable with increased spending as long as companies demonstrate growth and deal flow.
Looking ahead to 2025, Ives sees the AI transformation spreading across the software industry, with Palantir leading the charge followed by Salesforce and Oracle, marking what he calls "a renaissance of growth" for the sector.
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