Salesforce's Blowout Earnings Prove Data Trumps AI Models

The 'SaaSpocalypse' narrative has been debunked by Salesforce's recent blowout earnings, according to CEO Marc Benioff. The company's strong performance is a sign that the balance of power in AI may be shifting away from frontier models and back toward software companies that investors had prematurely left for dead.

The current market focus on large language models (LLMs) as the primary drivers of AI value has been misguided, Benioff argues. While LLMs have become increasingly capable, they are also becoming increasingly interchangeable. In this new world, if LLMs are the commodity, where is the moat? The answer lies in data.

Salesforce's unique position as one of the largest repositories of enterprise customer data in the world makes it a long-term structural winner from the commoditization of AI. Agents cannot work without data, so the data keeps flooding in: Salesforce's Data 360 ingested a staggering 104 trillion customer records this quarter, up 355% year over year.

The company's flywheel, agents generate work, work generates data, data deepens the moat and makes each successive generation of AI agents more valuable, is why Salesforce's combined AI and data annual recurring revenue has reached $3.9 billion, more than tripling in a single year.