Salesforce jumps on back of 'strong' Q1 results, guidance seen as 'bullish' for tech
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Salesforce (NYSE:CRM) shares jumped more than 11% in early trading Wednesday after the cloud computing software provider posted first-quarter results that topped expectations and issued guidance that was seen as "a major relief for tech investors" by some Wall Street analysts.
Wedbush Securities analyst Dan Ives, who has an outperform rating on Salesforce (CRM) shares and a target price of $225 a share, noted that Salesforce (CRM) is seen as a bellwether for tech and with it reporting outside of the normal schedule, investors were "laser focused" on its report and comments to see if there were any signs of weakness. Instead, it was the opposite.
In addition to Salesforce (CRM) reporting first-quarter revenue of $7.41B, which edged above analysts' estimates of $7.38B in sales, Ives said in a research that the company "gave mixed guidance that was much better than the Street was fearing and will be a key shot in the arm for the tech bulls."
Ives added that Salesforce's (CRM) outlook, along with those of Nvidia (NVDA), Zscaler (ZS) and Palo Alto Networks (PANW) "speak to cloud and cyber security pockets of demand that look relatively healthy," despite fears of much darker macroeconomic matters. 
Ivas also said that the shift to the cloud is roughly 40% complete and there is a "massive digital growth wave ahead" that will benefit Salesforce (CRM), as well as other cloud computing companies, including Microsoft (MSFT), Amazon (AMZN), Google (GOOG) (GOOGL) and Oracle (ORCL).
Other software-as-a-service stocks, including Workday (WDAY), ServiceNow (NOW), Adobe (ADBE) and Autodesk (ADSK) rallied on back of the results.
On the company's earnings call, co-CEO Marc Benioff said there had been a "whirlwind" of recent business activity, while co-CEO Bret Taylor added that the "digital transformation trends that accelerated during the pandemic are moving full steam ahead."
Citi analyst Tyler Radke noted the "strong" first-quarter results came despite foreign exchange headwinds.
Radke also pointed out that current revenue performance obligations, or cRPO, growth of 24% year-over-year in the quarter helped provide "upside to revenue and profitability," while cRPO growth in the second-quarter guidance implies 18% year-over-year organic growth, which is "relatively solid."
Bank of America analyst Brad Sills also called the first-quarter results "solid," noting that a beat and raise for revenue and margin show the "strategic value" of Salesforce's (CRM) customer stack is resonating with large businesses and there is a "renewed discipline" on operating expenses that should help drive "meaningful margin expansion and [free cash flow]."
Earlier this month, Roth Capital analyst Richard Baldry raised his rating on Salesforce's (CRM) stock to buy from neutral, but Wall Street didn't respond in a positive manner.