"Salesforce has woven AI into its CRM platform, promising productivity gains and automated workflows. The fundamentals look solid: 38.6% earnings growth year-over-year, 24% operating margins, and bullish analyst consensus. But revenue grew just 8.6% year-over-year while earnings surged 38.6%. That gap screams margin expansion and share buybacks, not organic AI-driven growth. The company trades at 29x trailing earnings and 17x forward earnings, commanding a premium for AI features bolted onto existing software."
"Netflix reported earnings on January 20, beating estimates with $0.56 per share against expectations of $0.55. Revenue hit $12.05 billion, topping the $11.97 billion consensus. The company crossed 325 million global subscribers. The stock fell 5% in after-hours trading. Why? Lower-than-expected guidance for Q1 2026 and the full year. Netflix announced an $83 billion all-cash acquisition of Warner Bros. Discovery, a defensive play against subscription fatigue rather than an offensive AI move."
"Why? Lower-than-expected guidance for Q1 2026 and the full year. Netflix announced an $83 billion all-cash acquisition of Warner Bros. Discovery, a defensive play against subscription fatigue rather than an offensive AI move. Netflix has no meaningful AI infrastructure business. Its AI applications are internal: recommendation algorithms and content optimization. Those are table stakes, not competitive moats. The Warner deal signals management sees consolidation as the path forward, not AI-driven expansion."
The AI gold rush created winners and losers, and market sorting remains incomplete. Some household names attract hype despite questionable positioning. Salesforce integrates AI into its CRM and reports strong earnings growth and operating margins, yet revenue growth lags, indicating margin expansion and buybacks rather than organic AI-driven revenue. Salesforce trades at premium multiples while its stock has declined significantly. Netflix beat recent estimates and grew subscribers but issued lower guidance and pursued an $83 billion Warner Bros. Discovery acquisition, signaling defensive consolidation. Netflix lacks meaningful AI infrastructure, using AI primarily for internal recommendations and content optimization.
Read at 24/7 Wall St.
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