Salesforce Taking Longer Than Expected to Shift to AI, Analyst Luria Says
Speakers
Gil Luria
— Technology Strategist at D.A. Davidson
Summary
Analyst Gil Luria reviews Salesforce and Snowflake earnings, highlighting a divergence in software sector outcomes. Salesforce faces slower growth and an AI transition taking longer, while Snowflake surges on strong results and an AWS deal. Luria sees Salesforce as cheap but not declining, and Snowflake as a clear winner entrenched in the AI ecosystem.
- Salesforce reported lower guidance, AI transition slower than expected.
- Snowflake exceeded high expectations and announced a $6 billion AWS deal.
- Software sector showing divergence between winners and losers.
- Salesforce trades at 10x cash flow, seen as stable cash generator.
- Snowflake trades at 40x cash flow, winning in AI ecosystem.
- Luria expects Salesforce can do better with cash returns and M&A.
- HP earnings also mentioned with shares rising after hours.
- Luria names Datadog and JFrog as other winners in software.
Trade Ideas
Salesforce cheap, not declining
Salesforce is trading at 10x cash flow with low expectations. While guidance disappointed and AI transition is slow, the company is not in decline. With significant cash returns to shareholders and potential accretive M&A, Salesforce can perform better than its current sluggish growth suggests.
Snowflake winning with AWS deal
Snowflake easily exceeded high expectations and is trading at 40x cash flow. Its multi-billion dollar deal with Amazon AWS entrenches it further in the AI ecosystem, making it more valuable. Snowflake is a clear winner in the software divergence theme.
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