Why Salesforce Rose 16% in December

Core Insights - Salesforce's shares performed well last month, driven by a strong third-quarter earnings report that exceeded bottom-line expectations and an increase in guidance [1][7] Financial Performance - Revenue increased by 8.6% to $10.26 billion, aligning with estimates, while adjusted earnings per share rose from $2.41 to $3.25, surpassing estimates of $2.86 [4] - Adjusted operating income improved from $3.12 billion to $3.63 billion, indicating a better reflection of profitability [4] Strategic Developments - The company reported a significant growth in annual recurring revenue (ARR) for its Agentforce and Data 360 platforms, which rose by 114% to $1.4 billion [5] - Remaining performance obligations (RPO), a measure of backlog, increased by 12% to $59.5 billion [5] - Salesforce raised its revenue guidance for the year to between $41.45 billion and $41.55 billion, representing a 9%-10% increase [5] Market Reaction - Following the earnings report, Salesforce's stock jumped 3.7% on December 4 and gained an additional 5.3% the next day as analysts reacted positively [3] - The stock traded sideways for the remainder of the month, despite positive announcements, including a deal with Novartis [6] Future Outlook - The year 2026 is anticipated to be significant for AI software stocks, with expectations for continued growth in Salesforce's AI initiatives [9] - The overall growth rate for Salesforce is expected to remain modest, but strong performance in AI could attract more investors [10]