Marc Benioff Unleashed a 30-Minute Tirade About AI’s Problems and ‘Stolen’ Data That Made Investors Forget About Salesforce’s Weak Sales Forecast

(Fortune) - Marc Benioff tapped into his roots as a skilled software salesman on Wednesday, launching into a nearly 30-minute earnings call exhortation that shifted the spotlight away from the company's weak sales forecast by blasting the AI industry for its problems with "stolen data," accuracy problems and other high-profile snafus.

"These models don't know anything about the company's customer relationships, and in case some cases are just making it up," Benioff exclaimed.

Benioff's rhetorical feat, which unsurprisingly highlighted the ostensible comparative benefits of Salesforce's AI products, got the job done: By the time the call ended, Salesforce's stock, which was down more 4.5% in after market trading, had bounced back to trading roughly 1% above its closing price. (The stock fell back into the red later on Wednesday, though its decline was still less severe than before Benioff's comments).

Demand to implement AI among Salesforce customers is "heavy," Chief Operating Officer Brian Millham said on the earnings call, although Salesforce executives acknowledged that they were not banking on any boost from AI in the company's sales forecast for its current fiscal year.

Salesforce said that it expects revenue in the current year to range between $37.7 billion and $38 billion, an increase of 8% to 9% from the prior year. That continues a slowdown in Salesforce's topline growth, which increased by 11% in the recently ended fiscal 2024, 18% in fiscal 2023, and 25% in fiscal 2022.

On the other hand, Salesforce has bulked up its profit margins in recent years thanks in large part to significant cost cutting in headcount and real estate. Operating margins increased to 14.4% in fiscal 2024, up from 3.3% the year before, and Salesforce projected operating margins of 20.4% for the current year. The company also announced Wednesday that it would pay investors a quarterly cash dividend of 40 cent per share.

During the call, Benioff seemed to delight in calling out examples of companies—some of whom he said were longtime Salesforce customers—who had been stung by high-profile AI mishaps after using products from other companies. Without naming names, he cited a recent court case involving Air Canada, in which the airline was forced to honor a refund policy after its customer service chatbot provided a customer with inaccurate airfare information.

"This company, which is a great company and a customer of ours but did not use our technology, went out there and used some kind of rogue AI that they picked off the internet," Benioff said during the call. "Some engineer just hobbled it, hooked it up, and then it started just spewing these hallucinations and falsehoods around their loyalty program, and the courts are holding them liable. Good."

It was one of several cautionary tales Benioff ticked off, including The New York Times' legal battle with OpenAI. "Let every CEO wake up and realize we are on the verge of one of the greatest transformation in the history of technology but trust must be our highest value," Benioff said.

"In the enterprise, you need deep integration of data and metadata for the AI to understand and deliver the critical insights and intelligence that customers need across their business, across sales, service, marketing, commerce, whatever it is. That deep integration of the data and metadata. That's not too easy," Benioff said. "That's not just some amalgamated, stolen, public data set. In the enterprise, that deep integration of data meant data and metadata. Oh, that's what Salesforce does."

Benioff also name-checked Nvidia CEO Jensen Huang, likening the company's AI chips to the indispensable "Levi's jeans" for modern-day gold miners. However, Benioff said, the true treasure trove resides in data, which is where he said Salesforce shines brightest with its portfolio of products to help businesses leverage all their internal data and ready it for AI applications.

The message: let others play with the clothing and pick axes in the AI gold rush, Salesforce has the gold.

By Kylie Robison


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