The artificial intelligence software industry is witnessing an intensifying competition between tech giants Salesforce and Microsoft, with both companies developing AI agent tools aimed at automating business tasks.
Market developments: Deutsche Bank has raised its price target on Salesforce to $365, citing the company’s new AI suite, Agentforce, as a key growth driver.
- Salesforce shares have surged more than 30% since mid-September when Agentforce was unveiled at the company’s annual conference
- The stock is trading near its all-time high of $341.73, with a year-to-date gain of 28%
- Industry conversations indicate strong interest in Agentforce, with reports of a mid-seven figure deal already secured
Technical innovation: Agentforce represents Salesforce’s second major attempt to leverage generative AI technology, following the relatively unsuccessful Einstein Copilot initiative.
- Agentforce enables the creation of autonomous AI agents that can complete tasks without supervision, such as updating shipping addresses on placed orders
- The platform became generally available on October 25, marking Salesforce’s entry into the next frontier of AI beyond basic chatbots
- This advancement positions Salesforce in the emerging field of AI agents, which are designed to take action rather than just provide responses
Competitive dynamics: Microsoft has responded with its own suite of AI agent tools announced at the Ignite conference, intensifying the rivalry between the two tech giants.
- Salesforce CEO Marc Benioff has publicly criticized Microsoft’s AI offerings, particularly its Copilot tool, comparing it to the outdated Clippy assistant
- Microsoft CEO Satya Nadella has highlighted Copilot’s success, claiming it’s the fastest-adopted Microsoft 365 suite with 70% penetration among Fortune 500 companies
- Microsoft’s stock has gained approximately 9% since the start of 2024, lagging behind Salesforce’s performance
Strategic implications: The success of Agentforce could mark a significant shift in Salesforce’s growth strategy.
- The company has historically relied on major acquisitions like Slack and Mulesoft to drive growth
- A successful Agentforce rollout would validate Salesforce’s internal innovation capabilities
- Analysts caution against overestimating the immediate impact, noting that the technology is still in its early stages
Looking beyond the rivalry: Despite the heated competition and Benioff’s criticisms, industry experts suggest both companies have strong potential in the AI space.
- Microsoft’s track record of successful pivots and deep technical expertise suggests it shouldn’t be underestimated
- The early stage of AI agent technology leaves room for multiple successful players in the market
- Investors may benefit from maintaining positions in both companies rather than choosing sides in this technological race
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