CRM earnings preview: Will Salesforce steal Nvidia’s shine?

As the earnings season nears a close, Salesforce is set to announce its Q4 earnings on Wednesday, 28 February. Tech companies have been in the spotlight the last few weeks, with giants like Microsoft and Amazon beating Wall Street’s earnings estimates. Salesforce Q4 results will be an interesting watch, marking the culmination of a busy 2023.

Salesforce in 2023

The year 2023 was a year of tough decisions for the company. CEO Marc Benioff acknowledged over-expansion during the pandemic. “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”

This led to Salesforce trimming 10% of its staff and disbanding its mergers and acquisitions committee to ensure leaner overheads. Despite these measures, the company’s bill was still high after announcing plans to acquire Airkit.ai and Spiff. This topped up a year that had seen the company spend $13.5 billion in marketing and sales. 

During the fiscal third quarter, Salesforce announced revenue of $8.72 billion, which met projections. Sales from previous acquisitions, specifically Tableau and MuleSoft, surged in the third quarter, offsetting core sales slowdowns. 

Anticipating Salesforce Q4 earnings

The company’s austerity measures seemingly paid off after recording strong Q3 earnings that beat industry estimates. The Q4 report card is expected to surpass Q3’s with analysts from Factset predicting earnings per share of $2.27 on revenue of $9.2 billion. 

With profits and margins being the focus in 2023, Salesforce could see Q4 numbers grab headlines in a manner reminiscent of Nvidia’s Q4 earnings call on Wednesday, 21 February. 

Salesforce and Nvidia in AI Race

With tech stocks dominating earnings season headlines, Nvidia has been the crown jewel of the industry. They managed to triple their stock price in 2023. Conversely, Salesforce’s growth in 2023 did not attract as much buzz, even with its share price growing more than 80% to almost reach its 2021 all-time high.

Salesforce and Nvidia may not be in the same business — with one being a SaaS leader and the other a chip maker pioneer — but their AI ambitions place them in competition, with products in ‘Nvidia deep learning’ and ‘Salesforce Einstein' competing for corporate and government clients. This comes against a backdrop of AI becoming the decade’s main player in the tech world. 

Though Nvidia has enjoyed runaway success thanks to its ‘Gold standard’ AI chips, Salesforce is chasing similar success by acquiring AI companies such as Airkit.ai. The company is also reportedly planning to invest in Nvidia’s chip reseller Together AI. They are looking to stride into the burgeoning AI environment.

Navigating Salesforce share price dynamics

CRM’s stock price at the moment is slightly above the $290 mark. This also appears to be on the road to its all time high of $309.96. If the bulls reach that mark like they did in the fourth quarter of 2021 and push through without being rebuffed, we could see a new all time high for CRM.

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The 50-day simple moving average (SMA) is significantly higher than the 200-day SMA, signalling strong short-term bullish sentiment. Traders should however take note of the Relative Strength Index (RSI) which is approaching the overbought threshold of 70.

Analysts are keen on key indicators as well as the much awaited earnings call. This is to get a better idea of the company’s trajectory in the tech space.