1) Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce, Inc. (NYSE:CRM) is in the SaaS industry as it provides cloud-based software solutions that are hosted and delivered over the internet. Bradley Sills, an analyst from Bank of America Securities, reiterated a “Buy” rating on the company’s shares with the same price target of $440.00. Salesforce, Inc. (NYSE:CRM) is well-placed for a revenue growth acceleration to 12% – 13% YoY by H2 2026, says Sills. This growth is expected to be aided by an improved spending environment and the introduction of Agentforce.
SaaS adoption has been growing across industries because of its scalability, cost-efficiency, and accessibility. These increased demand trends for SaaS solutions align directly with Salesforce, Inc. (NYSE:CRM)’s offerings, mainly its Customer 360 platform and CRM software. Furthermore, a rise of AI and ML in SaaS products offers Salesforce, Inc. (NYSE:CRM) an avenue to strengthen its position via platforms such as Einstein AI.
The company’s established market position and vast customer base offer significant advantages as the broader CRM landscape evolves. Montaka Global Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“There are multiple structural trends in the enterprise software space, including (i) the ongoing cloud migrations and digital transformations of enterprises, and (ii) the infusion of AI into software applications.
While the former remains in its early innings (80-85% of enterprise workloads still reside ‘on-premise’ – many of which will ultimately move to public clouds), the latter remains in its infancy.
Given all the hype of late, it’s hard to fathom that large-scale deployments of AI-based enterprise applications have barely even started. It’s all still to come. And we believe 2025 will be the first year that we really start to see meaningful deployments and adoption of these kinds of applications.
Consider another of our top 10 holdings, Salesforce, for example. Its revenue growth is at a cyclical low. Indeed, at just +8% per annum, as reported in the company’s most recent quarter, its rate of revenue growth has never been lower.
But in 2025, not only will price increases that were announced two years ago boost Salesforce, Inc.’s (NYSE:CRM) revenue growth, but the year will also mark the early stages of adoption of the company’s new ‘Agentforce’ (released only weeks ago). This is a new platform that lets businesses build and deploy their own custom AI agents to automate tasks, improve efficiency, and enhance customer experiences…” (Click here to read the full text)
While we acknowledge the potential of CRM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CRM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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