Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Dell Technologies delivered better-than-expected fourth quarter earnings as it continues to see strong demand for AI servers. Shipments for AI servers will hit $15 billion in fiscal 2026, according to the company.

The company reported fourth quarter earnings of $2.15 a share on revenue of $23.9 billion, up 7% from a year ago. Non-GAAP earnings were $2.68 a share.

Wall Street was looking for earnings of $2.53 a share on revenue of $24.57 billion.

Dell Technologies' Infrastructure Solutions Group delivered revenue growth of 22%. Jeff Clarke, chief operating officer, said:

"Our prospects for AI are strong, as we extend AI from the largest cloud service providers, into the enterprise at-scale, and out to the edge with the PC. The deals we’ve booked with xAI and others puts our AI server backlog at roughly $9 billion as of today."

Dell also raised its annual dividend by 18%.

For fiscal 2025, Dell reported earnings of $6.38 a share on revenue of $95.6 billion, up 8% a year ago.

As for the outlook, Dell projected fiscal 2026 revenue growth of 8% to between $101 billion and $105 billion and non-GAAP earnings per share growth of 23%.

Speaking on an earnings conference call, Clarke said:

"We booked deals putting our AI backlog at roughly $9 billion as of today. Our pipeline expanded sequentially and has grown every quarter since the introduction of the 9680. We are seeing continued progress in AI from enterprise customers, albeit still earlier in their journey with sequential growth in both orders and customers. And our engineering services, financing and ability to optimize density and performance per watt are important differentiators for the largest at-scale CSPs and provide very efficient enterprise solutions. In traditional servers, the growth trajectory continues, up double digits in Q4. We've now seen 5 quarters of year-over-year demand."

As for the outlook, Dell CFO Yvonne McGill said:

"IT spending is expected to grow with 3 underlying trends that we see. First, businesses are leveraging AI to enable competitive advantages, and we are seeing that in our opportunity pipeline that continues to expand. Second, data center modernization is well underway with a focus on consolidation and power efficiency. Third, customers are planning to refresh their PC installed base with AI-enabled devices."

By the numbers:

• Infrastructure Solutions Group (ISG) fourth quarter revenue was $11.4 billion, up 22% from a year ago. Annual revenue was $43.6 billion, up 29%.
• Servers and networking revenue in the fourth quarter was $6.6 billion, up 37% due to AI servers.
• AI backlog was $4.1 billion exiting the fourth quarter.
• Storage revenue was up $4.7 billion, up 5%.
• Operating income for ISG in the fourth quarter was $2.1 billion.
• Dell's PC unit revenue in the fourth quarter was $11.9 billion, up 2% from a year ago, with operating income of $631 million. Commercial client revenue was up 5% in the fourth quarter and consumer revenue fell 12%.

Other Dell items worth noting:

US government exposure. "We've had numerous times in our history where a country or a particular segment demand was suppressed for various reasons. We've been able to navigate the cycles, I think, pretty successfully," said Clarke. "Our underlying belief is United States government will need technology. AI plays a pretty significant role in our nation. And I think the demand will materialize. We'll get through whatever is happening today."

Tariffs. Clarke said:

"This is a pretty darn dynamic environment as represented what we heard this morning. It's fluid. We built an industry-leading supply chain that's globally diverse, agile, resilient that helps us minimize the impacts of these trade regulations, tariffs to our customers and shareholders. We've been monitoring this for some time. We've taken our digital supply chain, our digital twins actually using some AI modelling to look at every possible scenario that you might imagine of this country, that country, and restrictions to help us understand how we optimize our network and how we that in the least amount of time at the speed of Dell. And whatever tariff we cannot mitigate, we view that as an input cost. And as our input costs go up, it may require us to adjust prices." 

Nvidia Blackwell margins. Clarke said Blackwell margins remain lower than Hopper. "We're still early. The deals are very large upfront. There's more competitors, so it's a more competitive landscape," said Clarke.  He added:

"This is system design and architecture work. There's an ability to really distinguish our engineering and value add in that step, which is an opportunity for us to extract value and opportunity for us to reduce cost. These aren't reference designs or as we would affectionately call in the engineering community, they're not cookie-cutter designs. We're designing a unique rack, a unique power distribution unit. Our cooling, our manifold, the cold plate, the ability to engineer that and to drive that through the scale of our supply chain are opportunities for us, helping our customers attach with our networking with our storage or opportunities."

Constellation Research analyst Holger Mueller said it remains to be seen how on-premises AI can boost demand. "Dell manages to beat inflation, but not by much, as its client solutions business is still dragging, with even the commercial business barely clocking in at inflation rate," he said. "If Dell’s ISG business keeps growing as it did in the last fiscal, ISG will pass CSG, a milestone for Dell. Dell became more profitable, with EPS up by almost 40%. AI demand keeps being the main driver. The big question is: How strong will the on-premises AI bonanza be in 2025?"

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

OpenAI launched a research preview for GPT 4.5 and perhaps the biggest takeaway is that it can fake emotional intelligence pretty well--potentially better than a few humans we know.

The company outlined GPT-4.5 and noted that early testing shows that interactions with humans are more natural. OpenAI noted:

"Based on early testing, developers may find GPT‑4.5 particularly useful for applications that benefit from its higher emotional intelligence and creativity—such as writing help, communication, learning, coaching, and brainstorming. It also shows strong capabilities in agentic planning and execution, including multi-step coding workflows and complex task automation."

• OpenAI's Stargate Project diversifies its cloud infrastructure
• OpenAI launches GPT Store, Team plan, eyes developer, enterprise traction

For collaboration, GPT-4.5 may be a win since it has more EQ.

Key points about GPT-4.5:

• GPT-4.5 scales unsupervised learning by scaling up compute and data and reduces hallucinations.
• GPT-4.5 scored better than GPT-4o on collaboration skills.
• The model doesn't think before it responds.
• ChatGPT Pro users can select GPT-4.5 today with Pro and Team users getting it next week followed by Enterprise and education users.
• GPT 4.5 is compute intensive and more expensive than GPT-4o. It is not viewed as a replacement.

Constellation Research’s take

Andy Thurai, analyst at Constellation Research, said:

“OpenAI claims GPT-4.5 will have fewer hallucinations and more accurate writing, programming, and insights.

This is not a reasoning model but an unsupervised learning model. GPT-4.5 doesn’t have a chain of thought like the reasoning models therefore can respond faster. Instead of combining the reasoning models and responding models, OpenAI chose to separate them as the execution costs, and model training costs can be very high for reasoning models such as OpenAI GPT-o1 and o3 mini.

With the models running out of world data, and the model differentiation from the LLM providers becoming less and less differentiated, all of them are looking for ways to stand out. OpenAI has taken the direction of making their chatbot more human. OpenAI claims its EQ is better than other models, meaning the model recognizes tone and intent and responds with empathy rather than just solutions—just like a real human would. With that approach interactions can feel more natural and human like.

In initial testing, GPT-4.5  seems to show strong capabilities in agentic planning and execution, including multi-step coding workflows and complex task automation. However, there is concern in initial tests that it can fake emotional intelligence just like humans would.

However, at the current time these models are very expensive. GPT-4.5 is also restricted only to Pro users for now because of GPU shortage per OpenAI’s claim.”

• GPT 4.5 pricing: Price Input: $75.00 / 1M tokens Cached input: $37.50 / 1M tokens Output: $150.00 / 1M tokens
• GPT 4o pricing: Price Input: $2.50 / 1M tokens Cached input: $1.25 / 1M tokens Output: $10.00 / 1M tokens

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Amazon Web Services launched Ocelot, a first generation quantum computing chip that was developed with the California Institute of Technology.

The news lands as quantum computing developments land almost daily. IonQ is betting on quantum networking. Microsoft launches its new quantum computing processor and approach. Quantinuum blends AI and quantum computing. And meanwhile, the industry awaits a Nvidia GTC quantum computing panel with Jensen Huang.

Recent headlines include:

• IonQ doubles down on quantum networking, names new CEO as it eyes scale
• CxOs need to focus on quantum computing readiness, not the noise
• Here’s what Nvidia CEO Jensen Huang said about quantum computing, Project Digits and robotics
• Microsoft unveils Majorana 1, aims to scale quantum computing
• Practical quantum computing advances ramp up going into 2025
• Quantum computing all in on hybrid HPC with classical computing
• Quantinuum launches generative AI quantum framework, sees quantum computing as synthetic data generator

AWS said Ocelot can reduce the costs of quantum error correction by up to 90%. According to AWS, "Ocelot represents a breakthrough in the pursuit to build fault-tolerant quantum computers capable of solving problems of commercial and scientific importance that are beyond the reach of today’s conventional computers."

The findings behind Ocelot were published in a peer-reviewed research paper in Nature. Key details include:

• Ocelot is based on superconducting quantum circuits.
• It has a scalable architecture designed to lower error correction overhead.
• Ocelot includes the first implementation of a noise-biased gate, which tunes out errors.

Amazon is catching up with its own quantum computing hardware. Since quantum computing is going to be consumed almost solely in the cloud, hyperscalers are developing their own systems and offering choices and entry points to pure play providers.

Constellation ShortList™ Quantum Computing Platforms | Quantum Computing Software Platforms | Quantum Full Stack Players

In a statement, AWS said the design of Ocelot includes the 'cat qubit,' which suppresses certain forms of errors to reduce the resources needed for correction. AWS' quantum chip can be manufactured and scaled like a microelectronics processor. This scalable quantum chip format is also the big takeaway from Microsoft's Majorana 1 launch.

Oskar Painter, AWS director of Quantum Hardware, said practical quantum computers are available for real-world applications. "Quantum chips built according to the Ocelot architecture could cost as little as one-fifth of current approaches, due to the drastically reduced number of resources required for error correction," said Painter. "Concretely, we believe this will accelerate our timeline to a practical quantum computer by up to five years.”

Constellation Research's take

Holger Mueller, analyst at Constellation Research, said:

"AWS has entered the quantum space with its error correction capabilities announced back at Reinvent:2023, and is now moving backwards in the value chain and designing its first Quantum chip. No surprise that it has superconducting like all the promising announcements of the last 6 months. What stands out in the AWS design is the division of qubits for separate functions. This separation is also an AWS tradition if one considers the Nitro architecture. It will be interesting to see how the new platform will perform and potentially prove that specialized qubits on one chip are the way forward for quantum computing."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

IonQ is doubling down on quantum networking with an acquisition, diversifying globally and has a new CEO along with fourth quarter results and plans to raise more capital.

For one of quantum computing's highfliers that's a busy afternoon and a lot of transition going into a new fiscal year.

IonQ's busy news day was framed by a leadership change. IonQ named Niccolo de Masi CEO with Peter Chapman becoming Executive Chair. Chapman will focus on strategy and enterprise adoption. De Masi was already on IonQ's board and previously was CEO of the SPAC that hatched IonQ in 2021.

On a conference call, de Masi and Chapman took questions and covered topics seamlessly. "This evolution will allow me to spend more time focused on our strategic customer relationships and the development of quantum AI," said Chapman, who noted de Masi has been involved in IonQ's strategic direction and growth plans from the beginning. IonQ also named Gabrielle Toledano, Chief People Officer of Tesla, to its board.

• Constellation ShortList™ Quantum Computing Platforms | Quantum Computing Software Platforms | Quantum Full Stack Players
• CxOs need to focus on quantum computing readiness, not the noise

"There's a lot of continuity, and there's obviously an opportunity for the two of us to tackle two businesses, which are growing at inflection points that are truly historic," said de Masi. "There are no changes in strategic direction, because Peter and I have been working together closely to set the strategic direction the last five years, and we'll continue to do that."

And then there's the bet on quantum networking. IonQ has focused on quantum computing systems, but is betting that quantum networking can be just as big of a market. The company said it will buy ID Quantique in a move that will boost its quantum networking business. In November, IonQ bought Quibitekk.

The purchase of ID Quantique gives IonQ more quantum networking patents and diversifies the company's global footprint with expansion in South Korea. IonQ also forged a partnership with SK Telecom. With 300 patents from ID Quantique, IonQ now has 900 patents that are granted or pending.

• IonQ’s bet on commercial quantum computing working, acquires Quibitekk
• IonQ's quantum computing bets: Quantum for LLM training, chemistry and enterprise use case

Chapman explained:

"Our goal is to build a suite of products that enable secure quantum communication in all forms, from satellites to ground stations, across existing telecommunication fiber infrastructure, to drones on a battlefield. Those following IonQ closely will note that we are building out the key component technologies for the telecom and defense sectors. With the pending addition of ID Quantique and the completed addition of Qubitekk, we will partner with their existing blue chip customers, which include SK Telecom and the Electric Power Board of Chattanooga. These customer relationships allow us to test new hardware and applications in real-world environments."

Q4 results, new capital, new use cases

IonQ reported fourth quarter revenue of $11.71 million with a net loss of $202 million, or 93 cents a share. IonQ's net loss was inflated by the fair value of warrant liabilities. When IonQ shares go higher so do the warrant liabilities.

For 2024, IonQ delivered revenue of $43.07 million, nearly double from a year ago. The net loss was $331.65 million for 2024.

IonQ projected 2025 revenue of $75 million to $95 million with between $7 million to $8 million in the first quarter. IonQ also said it would offer $500 million in stock to raise cash that will be used to expand the quantum networking business.

Chapman said IonQ's partnership with AstraZeneca is showing promising results in chemistry modeling. An Ansys partnership puts IonQ in the computer-aided engineering market. “We believe that 2025 will, in fact, be the year of quantum, one in which you see both public and private institutions realize that computing and networking game will be forever changed by IonQ systems,” said Chapman. “With commercial advantage right around the corner, the inflection point that everyone has been waiting for is not far behind it.”

In the weeks ahead, IonQ will outline commercial advances, appear at Nvidia GTC and launch new quantum computing metrics as it depreciates its AQ performance benchmark, said Chapman. 

More quantum computing:

• Microsoft unveils Majorana 1, aims to scale quantum computing
• Practical quantum computing advances ramp up going into 2025
• Quantum computing all in on hybrid HPC with classical computing
• Quantinuum launches generative AI quantum framework, sees quantum computing as synthetic data generator

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Nvidia delivered strong results in the fourth quarter as its data center business posted growth of 93% from a year ago.

The company reported fourth quarter earnings of 89 cents a share (GAAP and non-GAAP) on revenue of $39.3 billion, up 78% from a year ago.

Wall Street was expecting Nvidia to report fourth quarter non-GAAP earnings of 80 cents a share on revenue of $38.16 billion.

• Nvidia launches Project Digits, a desktop AI supercomputer
• Nvidia launches Cosmos models, aims to expand physical AI, industrial reach
• Nvidia moves to advance agentic AI use cases at CES 2025
• Here’s what Nvidia CEO Jensen Huang said about quantum computing, Project Digits and robotics

Going into the earnings, Nvidia investors had been skittish about AI infrastructure spending due to DeepSeek's emergence. With foundational models going commodity, the need to spend on AI infrastructure may be diminished.

• DeepSeek's real legacy: Shifting the AI conversation to returns, value, edge
• DeepSeek: What CxOs and enterprises need to know | GenAI prices to tank: Here’s why

The results appear to eased those AI infrastructure spending concerns for now. CEO Jensen Huang said: “We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter. AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries.”

As for the outlook, Nvidia projected first quarter revenue of $43 billion, give or take 2%.

Wall Street was looking for Nvidia to report first quarter earnings of 91 cents a share on revenue of $42.05 billion, up 61% from a year ago. Analysts were expecting Nvidia to report fiscal 2026 revenue of $196 billion with non-GAAP earnings of $4.43 a share.

Key comments from CFO Colette Kress:

• "We delivered $11.0 billion of Blackwell architecture revenue in the fourth quarter of fiscal 2025, the fastest product ramp in our company’s history. Blackwell sales were led by large cloud service providers which represented approximately 50% of our Data Center revenue."
• "Automotive revenue for fiscal 2025 was up 55% from a year ago. Automotive revenue for the fourth quarter was up 103% from a year ago and up 27% sequentially. These increases were driven by sales of our self-driving platforms."
• "Networking revenue was $3.0 billion, down 9% from a year ago and down 3% sequentially. We are transitioning
• from small NVLink 8 with Infiniband to large NVLink 72 with Spectrum X. Networking experienced growth in Ethernet for AI, which includes Spectrum-X end-to-end ethernet platform, and NVLink products related to the ramp of our Grace Blackwell platform."

Ahead of the earnings, Nvidia and Cisco said they will create a unified architecture for networks optimized for AI workloads.

Nvidia will couple Cisco Silicon One with Nvidia SuperNICs as part of the Nvidia Spectrum-X Ethernet networking platform. Cisco becomes the only partner silicon in the networking system.

Cisco will build systems combining Nvidia Spectrum silicon with Cisco's operating system software. The companies will also co-sell the data center gear.

Huang commets

Speaking on an earnings conference call, Huang said the following:

• "The amount of computation you use for post training is actually higher than pretraining. And it's kind of sensible in the sense that you could, while you're using reinforcement learning, generate an enormous amount of synthetic data or synthetically generated tokens."
• "We have some 350 plants manufacturing the 1.5 million components that go into each one of the Blackwell racks, Grace Blackwell racks."
• "The next train is on an annual rhythm and Blackwell Ultra with new networking, new memories and of course, new processors, and all of that is coming online. We've have been working with all of our partners and customers, laying this out. They have all of the necessary information, and we'll work with everybody to do the proper transition. This time between Blackwell and Blackwell Ultra, the system architecture is exactly the same."
• "Using Agentic AI to revolutionize the way we work inside companies, that's just starting. This is now the beginning of the agent AI era, and you hear a lot of people talking about it and we got some really great things going on. And then there's the physical AI after that, and then there are robotic systems after that."
• "The more the model thinks the smarter the answer. Models like OpenAI, Grok-3, DeepSeek-R1 are reasoning models that apply inference time scaling. Reasoning models can consume 100x more compute. Future reasoning models can consume much more compute. DeepSeek-R1 has ignited global enthusiast -- it's an excellent innovation. But even more importantly, it has open source a world-class reasoning AI model. Nearly every AI developer is applying R1 or chain of thought and reinforcement learning techniques like R1 to scale their model's performance."

Constellation Research's take

Constellation Research analyst Holger Mueller said:

"Rumors of Nvidia’s demise courtesy of DeepSeek have not materialized, at least in this quarter. All YoY comparisons of Nvidia are out of this world – like revenue more than doubling, operating and net income up 140+%. The quarter over quarter comparisons are slower, and coming to a realistic pace for Nvidia. What is remarkable is that the team around Jensen Huang kept cost under control and Nvidia is more profitable now that a year ago. Nvidia shows thriftiness and frugality, never a bad trait in the volatile chip industry. It is remarkable that a tech vendor who had no substantial data center revenue, is now showing over 80% of revenue in data center, while being 10x larger. Truly remarkable. Let’s see how the party so far will switch to a happy growth mood in 2025 – or not. Q1 will tell."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Salesforce said it has closed 5,000 Agentforce deals since October with 3,000 of them paid, but the company's fourth quarter results were mixed relative to estimates.

The company reported fourth quarter earnings of $1.71 billion, or $1.75 a share, on revenue of $9.99 billion. Non-GAAP earnings in the fourth quarter were $2.78 a share. Wall Street was expecting Salesforce to report fourth quarter non-GAAP earnings of $2.61 a share on revenue of $10.04 billion.

Salesforce, Google Cloud expand partnership: Here's what it means

See: Behind the Scenes: The Force Behind Agentforce | Salesforce launches Agentforce 2.0 as it ramps its release cadence | Salesforce Dreamforce 2024: Takeaways on agentic AI, platform, end of copilot era

For fiscal 2025, Salesforce reported earnings of $6.2 billion, or $6.36 a share, on revenue of $37.9 billion.

As for the outlook, Salesforce projected revenue growth, which remains in the single digit range.

For the first quarter, the company projected first quarter revenue of $9.71 billion to $9.76 billion, up about 7% in constant currency. Salesforce projected fiscal 2026 revenue of $40.5 billion to $40.9 billion up 7% to 8% in constant currency.

CEO Marc Benioff said Salesforce is well positioned for "the digital labor revolution" and "deeply unified platform." CFO Amy Weaver, however, noted that it's early in the Agentforce adoption cycle. "The adoption cycle is still early as we focus on deployment with our customers. As a result, we are assuming a modest contribution to revenue in fiscal '26. We expect the momentum to build throughout the year, driving a more meaningful contribution in fiscal '27," she said. 

In the second quarter, platform and other had revenue growth of 12%, but other clouds such as sales, service and marketing all had single digit revenue growth.

Speaking on an earnings conference call, Benioff hit on themes of a unified platform as well as Agentforce and Data Cloud traction. He said:

"We have this incredible Data Cloud, and this incredible agentic platform. These are the three layers, but it's this that it is a deeply unified platform. It's a deeply unified platform. It's just one piece of code. That's what makes it so unique in this market and that is why customers are having so great success with it.

It's not a collection of disjointed parts. You're going to have to kind of self-assemble, DIY it, all kinds of how do you get the security running, how do you do this, how do you do that. It's this idea that it's a deeply unified platform with one piece of code all wrapped in a beautiful layer of trust. And that's what gives Agentforce this incredible accuracy that we're seeing."

Constellation Research analyst Holger Mueller said:

"Salesforce has a great quarter and year, missing the $10 billion revenue mark for the first time, by just a hair. Agentforce is front and central to growth, but now we will see in 2025 whether AI is adding to Salesforce related spend, or if it cannibalizes other Salesforce expenses. The question is, how much budget will CFOs 'rob' from somewhere else to fund AI from a SaaS vendor, or stick to the same apps budget. We know extra budget was found for custom AI, but the verdict for packaged AI is still out and Q1 / Q2 will tell. 

The negotiation question for enterprises will be: What has the SaaS vendor delivered in maintenance improvement in it's core, non AI offering? If that is of substance, things are hard for a CFO / CPO. The argument can be made that the vendor poured all resources into AI and neglected the core business automation maintenance and natural functional automation progression. What wound you have done if there was no AI is the question?" 

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Snowflake and Microsoft have expanded their partnership in a move that puts OpenAI and Anthropic models in Snowflake's Cortex AI natively.

Cortex AI is Snowflake's fully managed AI service. According to the companies, Snowflake Cortex AI will integrate Microsoft Azure OpenAI Service in Azure AI Foundry. That move will put OpenAI's models Snowflake and make them available as data agents in Snowflake's AI Data Cloud.

The data platform space has seen a flurry of deals and partnerships. For instance, SAP and Databricks paired up on SAP Business Cloud. IBM acquired DataStax to add to its watsonx platform. Salesforce and Google Cloud also expanded a partnership that includes Data Cloud.

• Constellation ShortListâ„¢ Automated Cloud Data Warehouse Services
• Constellation ShortListâ„¢ Customer Data Platform (CDP)

For Snowflake, adding OpenAI to Cortex AI gives it some differentiation for its data platform. Snowflake is looking to stand out for AI inference workloads across multiple cloud regions.

Snowflake's partnership with Microsoft includes the following:

• Snowflake customers will be able to leverage OpenAI models within Snowflake Cortex AI on Microsoft Azure and run them with Snowflake Horizon Catalog and compliance and security settings.
• Enterprises will be able to create data agents powered by OpenAI within Snowflake's AI Data Cloud.
• Snowflake becomes a platform that hosts both Anthropic and OpenAI models on its platform.
• The companies also announced a native integration to make Snowflake Cortex Agents available in Microsoft 365 Copilot and Microsoft Teams. Microsoft users will be able to interact with unstructured and structured Snowflake data from their daily apps. Availability for this integration is expected in June.

Also see:

• Snowflake bolsters Cortex, launches AI and ML Studio, Snowflake Trail
• Snowflake to support Polaris Catalog for Apache Iceberg
• Microsoft Build 2024: Microsoft Fabric opens up, adds real-time intelligence, Snowflake, Databricks connections
• Databricks annual revenue run rate hits $3 billion, compared to Snowflake’s $3.77 billion

Snowflake posts strong Q4 growth

Separately, Snowflake reported strong fourth quarter results with revenue growth of 28% from a year ago. Snowflake reported a fourth quarter net loss of $327.47 million, or 99 cents a share, on revenue of $986.77 million. Non-GAAP earnings in the fourth quarter were 30 cents a share.

For fiscal 2025, Snowflake reported revenue of $3.63 billion, up 29% from a year ago. Snowflake's net loss for fiscal 2025 was $1.29 billion, or $3.86 a share. Non-GAAP earnings were 83 cents a share.

Sridhar Ramaswamy, CEO of Snowflake, said the company has become one of "the most consequential data and AI company in the world." Snowflake has more than 11,000 customers.

As for the outlook, Snowflake projected first quarter product revenue between $955 million to $960 million. For fiscal 2026, Snowflake projected product revenue of $4.28 billion, up 24% from a year ago.

Constellation Research analyst Holger Mueller said:

"Snowflake had a good growth quarter, but growth came at a cost, as it practically doubled its EPS loss year over year. Sridhar Ramaswamy and team now need to show that they cannot only grow, but they can also grow with profitability in mind, as the quarterly trend is not encouraging. When a single billion revenue tech vendor racks up an over $1 billion net loss, while growing almost 30% - the alarm bells go off. Running an AI company isn’t cheap – as cost of revenue is up 30+% YoY, and as operating expenses are up 25% the warning bells are being tested. We will see if Q1 bides better, the critical aspect being that Snowflake was not doing anything spectacular in regards of one time investments. With guidance for product revenue pulling back into the low 20ies there is further data for concern."

Speaking on an earnings conference call, Ramaswamy said:

• "Our core business is very strong. Our product delivery is in overdrive and our go-to-market engine is humming. We are innovating better than ever and firing on all cylinders and we have an enormous opportunity ahead of us."
• "As our competitors continue to require expensive engineering resources to maintain and scale, more and more customers are seeing real bottom-line impact by turning to Snowflake. We have seen more and more Snowflake customers save over 50% by migrating to us from other providers."
• "Customers should have a right to decide where it is that their data should be. And as far as we are concerned, I think we are very uniquely positioned as a central and very efficient repository of data for most companies."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Amazon launched Alexa+, a revamped version of its voice assistant powered by generative AI models such as Amazon Nova and Anthropic Claude via AWS' Amazon Bedrock.

Alexa+ will work with most of the 600 million Alexa devices in the field. Amazon will charge $19.99 a month, but Amazon Prime members get Alexa+ bundled in. Alexa+ will also be able to navigate the web to act on your behalf for things like scheduling and dinner reservations.

While Amazon's Alexa+ launch and portfolio of devices was consumer focused, the effort will also be a showcase for AWS and Amazon Bedrock.

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Daniel Rausch, vice president for Alexa and Echo, talked about the architecture behind Alexa's brain transplant. Key points about Alexa+ architecture include:

• Alexa+ leverages large language models (LLMs) including Amazon Nova and Anthropic.
• Alexa+ will select the best model for any task via a new routing system.
• Amazon forged agreements with major news organizations to ground answers.
• Alexa+ has a new architecture that orchestrates APIs at scale so it can book appointments and order items from the likes of GrubHub, OpenTable, Amazon, and a host of others.
• LLMs integrate with APIs, but can make several API calls in a row.
• Alexa+ will have the ability to carry out agentic actions and navigate web pages as you would.