Salesforce's earnings showed that AI isn't killing traditional software, and that the operators of major AI models are willing to strike partnerships with legacy vendors

Shares of Salesforce climbed 10% in premarket trading on Thursday.

Salesforce's earnings just sent a confident signal to investors that artificial intelligence isn't a "death knell" for the software sector, in the words of one analyst.

Software stocks are broadly rallying in Thursday's premarket trading as the commentary from Salesforce - as well as from companies like Okta (OKTA) and CrowdStrike Holdings (CRWD) - resonated with the investment community.

Shares of Salesforce (CRM) were up 10% in premarket trading on Thursday, and the iShares Expanded Tech-Software Sector ETF IGM, a proxy for software stocks, was up 2.5%. Shares of Oracle (ORCL) and ServiceNow (NOW) were up 2%. Shares of Adobe (ADBE), Fortinet $(FTNT)$, and Applovin (APP) were up roughly 1%.

Guggenheim analyst John DiFucci wrote in a Thursday note that Salesforce "went a long way in dispelling the SaaSpocalypse that CEO Marc Benioff has been fighting for the last 6 months or so." That's a reference to a term meant to capture the gloomy market sentiment that has dogged software-as-a-service stocks since last year.

One big takeaway from Salesforce's earnings results is that the company reported the strongest growth in net new annual order value in four years, DiFucci noted.

Salesforce also noted that customer attrition was near its lowest level ever, which came even as "skeptics said customers would leave," as CEO Marc Benioff said on the earnings call.

"These results," DiFucci wrote, "support our recent call that says AI is a technology paradigm shift that all software companies need to embrace, and while it presents material risk to many names, it's not likely to be a death knell."

He added: "The SaaSpocalypse may not be gone, but the AI death knell is certainly less loud."

Salesforce also announced that it was extending its relationship with Anthropic on Wednesday through "Claudeforce," a project to integrate Anthropic's Claude AI model into its products.

And a large part of Salesforce's earnings gain comes from its investment in Anthropic, which first began during the AI company's Series C funding round in 2023.

Cantor Fitzgerald analyst Matthew VanVliet wrote positively of the collaboration, which he thinks "sends a broader message" about how operators of large language models are partnering with traditional software companies rather than "displacing" them.

Kirk Materne of Evercore ISI took a similar view, writing that "the Claudeforce announcement helps illustrate the viability of a 'better together' outcome for key system-of-record vendors and the AI vendors and pushes back on the more existential bear theses."

-Nora Redmond -Hannah Pedone