Despite the tech cold war with China, Wall Street says Salesforce is in a strong position and will see little impact

Despite the tech cold war with China, Wall Street says Salesforce is in a strong position and will see little impact

Marc R. Benioff, Chairman and Chief Executive Officer of Salesforce, Member of the Board of Trustees of World Economic Forum, gestures as he attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 23, 2018.

Denis Balibouse/Reuters

Salesforce co-CEO Marc Benioff

  • On Tuesday, Salesforce beat Wall Street's expectations and reported a revenue of $3.74 billion, up 24% from last year.
  • On Wednesday, Salesforce's stock was up 5%.
  • Salesforce co-CEO and co-founder Marc Benioff acknowledged some concerns around a tech cold war with China.
  • Analysts believe Salesforce is safe from these pressures because it's largely an American business and resists foreign clouds, and as more companies move to the cloud, Salesforce will continue to have plenty of growth opportunity.
  • Read more on the Business Insider homepage.

Despite the uncertainties roiling global markets because of the trade war, Wall Street thinks Salesforce is a safe choice in the software market, and that's it's poised to grow even more.

Salesforce expanded its topline 24% year-over-year, generating revenue of $3.74 billion during its most recent quarter, the company reported this week. The results beat analyst expectations and sent Salesforce shares up 5% on Wednesday.

Analysts credited some of the upside to positive results from the MuleSoft acquisition, as well as growth in government and European businesses.

Whle Salesforce acknowledged that there was some anxiety around the trade situation, investors seem to believe the company is less vulnerable than others to the tariffs and other risks of the escalating tech cold war between the US and China.


"Salesforce is more insulated than the overall technology sector when it comes to President Trump's trade policy with China, which has been a major point of emphasis for uncertainty and volatility in the overall market," Brian Pirri, principal at New England Investment & Retirement Group, wrote in a note to investors.

UBS analyst Jennifer Lowe wrote in a note that Salesforce "isn't seeing any impact on results today."

"An ocean liner surrounded by speed boats"

As Salesforce seeks to maintain its healthy revenue growth rates, a bigger threat than the trade war may be the rising competition. From Microsoft, Oracle and SAP, to a crop of fast-growing startups, Salesforce's business is under siege on many fronts.

Read more: The $6.5 billion acquisition that everyone hated a year ago was the only thing everyone loved about Salesforce's latest quarter

Rebecca Wettemann, vice president of research at Nucleus Research, says that Salesforce may face some competition from Microsoft, but it has also done well in making its artificial technology accessible to new users.


"Salesforce's ability to rapidly productize and make things accessible for customers to use is a key part of their success," Wettemann told Business Insider. Marty Wolf, founder and president of martinwolf, echoed the sentiment, describing Salesforce as "an ocean liner surrounded by speed boats."

And with so many businesses shifting their operations to the cloud, the market is huge, say analysts.

New England Investment & Retirement Group's Pirri estimates that it's possible that Salesforce's revenue can double in the next four years, as there are opportunities through acquisitions, expansions, and acquisitions with tech giants like Amazon and Google.