10 Stocks Hedge Funds Are Crazy About Right Now

7. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Investors In Q1 2024: 154

Salesforce, Inc. (NYSE:CRM) is a software as a service (SaaS) company that provides customer relationship management software products. 2024 has been a rough year for the firm so far after its shares tanked by 20% after the first quarter earnings marked Salesforce, Inc. (NYSE:CRM)’s first revenue miss since 2006. This miss is crucial for a SaaS company since revenue growth is a key metric for SaaS evaluations. To make matters worse, the current quarter guidance also saw Salesforce, Inc. (NYSE:CRM) guide revenue growth lower than 10% for the first time. Put together, these factors hint at a slowing economy making businesses revaluate their SaaS spending, particularly in the context of higher inflation and investor worries about AI disrupting the SaaS industry and allowing alternatives to surface.

Harding Loevner mentioned Salesforce, Inc. (NYSE:CRM) in its Q1 2024 investor letter where it remained bullish on the firm due to the SaaS company’s considerable customer base and ‘agnosticism’ when it comes to using GPUs. The financial firm shared:

SAP, and ServiceNow are also already deeply integrated into their customers’ operations and workflow. Few users want to go through the hassle of changing or adding providers if their existing systems can offer some kind of equivalent upgrade. This effect is even more powerful if a customer can add AI capabilities to existing software and, for just a few extra dollars a month, meaningfully improve productivity. Microsoft said in January that 1.3 million subscribers are already paying the additional charge for the Copilot upgrade to GitHub. Furthermore, enterprise-software companies can make money from AI without regard for whose GPUs or ASICs are used in the future. And should the industry’s AI-monetization plans disappoint, they may be more resilient than a company such as NVIDIA, whose growth is more dependent on AI investment.