Salesforce Stock Slumps After Earnings, UiPath Tumbles, and Other Tech News Today

Salesforce

stock plunged 20.4% to $216.47 and was on pace for its worst day since July 2004, according to Dow Jones Market Data. The cloud-based software company missed first-quarter revenue expectations and offered disappointing guidance. The company expects fiscal second-quarter revenue of between $9.2 billion and $9.25 billion, below Wall Street estimates of $9.35 billion.

Chief Operating Officer Brian Millham said Salesforce was impacted by “elongated deal cycles, deal compression and high levels of budget scrutiny.”  

Third Bridge analyst Charlie Miner said Salesforce’s earnings were a “total mess” and cited an uninspiring growth narrative and deceleration in margin growth as being behind the stock reaction.

“While Salesforce remains the undisputed leader in CRM and application software, its growth story, now driven by modest price hikes and drawn-out cross-sells, clashes with its desire to be viewed as an inspiring, nimble software leader ready to capitalize on a tremendous AI opportunity,” Miner added.

D.A. Davidson analyst Gil Luria said in a note Thursday that the company was being “crowded out by AI.” He maintained a Neutral rating on the stock but lowered his price target to $230 from $300. However, he noted that underlying positives, including strong demand for its core products, gave management increased confidence in sticking to its full-year revenue guidance.

Some analysts remained bullish on the stock, though, despite the disappointing earnings. Wedbush analyst Dan Ives described the report as a “small bump in the road into a stronger growth trajectory.” He has an Outperform rating on the shares and a $315 price target.

“We would be buyers on weakness this morning as seeing the forest through the trees this is a turnaround in motion for a premier tech stalwart with a massive installed base led by one of the best CEOs in the global tech landscape,” Ives said in a note Thursday.

Raymond James analyst Brian Peterson said the 15% after-hours selloff was “overdone,” and reiterated a Strong Buy rating on the stock with a $325 price target. He said that while a slowdown in growth is never going to be well-received, its magnitude in this case “isn’t thesis changing.”

But Salesforce wasn’t the worst performer among those reporting earnings. That unwanted accolade went to

UiPath
,

which slumped 35%.

The enterprise automation and AI software company posted a wider-than-expected loss in the first quarter, cut its full-year revenue guidance, and announced the abrupt exit of CEO Rob Enslin. UiPath co-founder and former CEO Daniel Dines will take over from June 1. 

Okta
’s

earnings also weren’t well-received as the stock fell 5.7% after climbing in premarket trading. The move came despite the security software company hiking its full-year earnings and revenue outlook.

AI software provider

C3.ai

had a stellar fiscal fourth quarter as revenue rose 20%, beating Wall Street estimates for a 5% gain. “Demand for Enterprise AI is intensifying, and our first to market advantage in Enterprise AI positions us well to capitalize on it,” CEO Thomas Siebel said in the earnings release. The stock jumped 13.7%.

Nvidia

stock edged 0.3% higher, while other chip stocks including

Advanced Micro Devices
,

Intel

and

Qualcomm

also rose. However,

Micron Technology

fell 1.4%.

Google announced plans to invest $2 billion in data center and cloud services in Malaysia, continuing Big Tech’s expansion in Southeast Asia. Shares of

Alphabet
,

the parent company of Google, were 1.6% lower.

Write to Callum Keown at callum.keown@barrons.com