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Thursday’s Big Tech News: Salesforce, C3.ai & More

Plus500 | Thursday 30 May 2024

As earnings season continued this week, many reports may have shiftedtrader sentiment toward key Big Tech firms, and news about the latest artificial intelligence (AI) advances hit the airwaves as well. Let’s take a look at how the quarterly reports of C3.ai and Salesforce, along with OpenAI’s new project, may be influencing the markets: 

Thursday’s Big Tech News: Salesforce, C3.ai & More

C3.ai Gets a Bump

On Wednesday, May 29th after the ring of the closing bell, C3.ai (AI) released its fiscal Q4 2024 figures to the public. The software firm reported a jump in its quarterly revenue, saying demand for AI is “intensifying.”

C3.ai took a loss of $73 million, or 59 cents per share, in the fiscal fourth quarter, compared with a loss of $65 million, or 58 cents per share, in the year-ago quarter. However, this figure was not as gloomy as had been predicted; estimates had been for a loss per share figure of 30 cents.

Revenue rose 20% to $86.6 million, including subscription revenue of $79.9 million, the company said.

In the words of C3.ai CEO Thomas Siebel, “Demand for enterprise AI is intensifying, and our first-to-market advantage in enterprise AI positions us well to capitalise on it.” C3.ai’s applications have reportedly been increasingly adopted across diverse market sectors amid growing interest in generative artificial intelligence.

For fiscal 2025, the firm’s expectation is revenue growth of 23%, with the first quarter to contribute up to $89 million to this figure. For the year total, C3.ai’s guidance is for revenue to possibly reach $395 million. How the firm’s Q4 figures may influence trading behaviour over the course of Thursday, May 30th, at this point remains opaque. (Source: MarketWatch)

Has Salesforce Lived Up to Its Name?

Salesforce (CRM) released its Q1 2025 earnings report released on Wednesday, May 29th, after the bell. The figures revealed by the software giant may prove to be a contributing factor to continuing investor concern regarding the software sector's economic health. The firm's guidance for the current quarter came in lower than expected, leaving the question of how market participants will react over the course of the trading day Thursday open.

In its fiscal first quarter, Salesforce reported a net income of $1.53 billion, or $1.58 per share, compared to $199 million, or 20 cents per share, in the same period last year. After adjustments, the company earned $2.44 per share, surpassing some estimates. Furthermore, the software giant's revenue increased by 11% to $9.13 billion, slightly below the consensus predictions of $9.15 billion.

However, for the current quarter (Q2 2025), Salesforce projects revenue between $9.20 billion and $9.25 billion, with adjusted earnings per share (EPS) of $2.34 to $2.36. These figures fall short of analysts' expectations, which had forecast $9.35 billion in revenue and an EPS of $2.40.

“We continue to see measured behaviour similar to what we experienced over the past two years,” said Salesforce CEO Brian Millham during the earnings call. He noted that aside from a strong fourth quarter, the company faced moderated momentum in Q1. Millham also mentioned deliberate changes in Salesforce’s go-to-market strategy implemented to raise the bar with regard to long-term productivity and customer experience, which contributed to the weaker booking performance.

Salesforce has revised its full-year forecast for subscription and support revenue, now anticipating slightly below 10% growth. Previously, the firm’s number crunchers had foreseen this figure fully in the double digits. However, the company has maintained its overall full-year revenue outlook of $37.7 billion to $38 billion.

Despite some positives, such as a 25% acceleration in data-cloud growth and a 27% increase in Mulesoft growth, analysts remain cautious. Whether this approach will be reflected on the world's trading floors in the days ahead remains to be seen.

OpenAI Eyes Next Steps

OpenAI announced on Tuesday, May 28th, that the process of training the latest edition of its world-famous large language model (LLM), which powers the ChatGPT chatbot, has begun. The company, backed by venerable industry giant Microsoft (MSFT) revealed in a blog post that this "next frontier model" aims to enhance capabilities significantly, moving toward building artificial general intelligence, which would exhibit human-like abilities.

In addition, OpenAI revealed the formation of a new safety and security committee. This committee will advise the board on critical decisions related to these spheres that may affect the firm’s future operations. 

This committee has as its initial mission the evaluation of OpenAI’s safety protocols, and will deliver recommendations for possible improvements at the end of a three-month assessment period. 

Members of the safety committee include OpenAI CEO Sam Altman, Chairman Bret Taylor, and board members Adam D'Angelo and Nicole Seligman, along with four of the company’s technical and policy experts.

Earlier this month, OpenAI introduced its GPT-40 model, featuring real-time conversation skills. The company faces pressure to expand ChatGPT's user base, having impressed the world with its ability to generate human-like text and high-quality software code. Shortly after its late 2022 launch, ChatGPT became the fastest application to reach 100 million monthly active users. With the latest iteration of the backing software apparently on the way, expectations may be for ChatGPT to continue to occupy financial news headlines going forward.

Conclusion

With artificial intelligence advancements continuing to shake the markets, the AI sector’s fortunes may seem volatile at times. Market watchers and traders alike will have to see how the reaction to the latest news detailed above plays out in the coming days.


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