We recently published a list of 10 AI Stocks on Wall Street’s Radar After DeepSeek Breakthrough. In this article, we are going to take a look at where Salesforce Inc (NYSE:CRM) stands against other AI stocks on Wall Street’s radar after DeepSeek breakthrough.
AI investors are desperately trying to find clues on the real impact of DeepSeek on chip demand in the future and gauge how the breakthrough in China would impact US companies. Tae Kim, senior technology writer at Barron’s, said in a latest program on CNBC that DeepSeek has been able to significantly reduce the AI costs but that would increase more use cases of the technology:
“Over time, computing history has shown when you get more computing power and put that into the hands of developers, they figure out new applications, new workloads to use it. I mean, there’s that saying, “Oh, you only need 640k of memory,” and then obviously that proved false. So over time, like researchers, I mean, we have healthcare, drug discovery, trillions of proteins that need to be simulated, robotics. There are these three mega trends that are happening this year right now: multimodal, where you analyze audio and video, there’s AI agents, all these things are happening that are going to require more computing power.”
The question, however, everyone would be focusing on in the coming days is what if a hardware breakthrough happens in China and the country comes up with its own AI chips performing at par with its US counterparts.
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A customer service team in an office setting using the company’s Customer 360 platform to communicate with customers.
Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Investors: 116
Earlier in January, Salesforce Inc (NYSE:CRM) was downgraded to Sell from Neutral by Guggenheim while the firm set a $247 price target for the stock. The stock has surged about 30% over the past four months since Salesforce Inc (NYSE:CRM) unveiled Agentforce during its August conference call, Guggenheim analyst John DiFucci noted in a client report. However, DiFucci added that Salesforce Inc (NYSE:CRM) is unlikely to “meaningfully” monetize Agentforce unless it acquires several companies already offering similar services.
DiFucci also pointed out that Salesforce Inc (NYSE:CRM) has lacked significant organic innovation recently, and many enterprise sales staff left following executive changes in 2022. The analyst believes the company could see growth of 5% to 7%, with 9% to 10% growth appearing unlikely.
Vulcan Value Partners stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q4 2024 investor letter:
“There were five material contributors to performance: Amazon.com Inc., Salesforce, Inc. (NYSE:CRM), Live Nation Entertainment Inc., Carlyle Group Inc., and Alphabet Inc. There were no material detractors. Salesforce is the world’s leading SaaS vendor for customer relationship management (CRM) and salesforce automation (SFA) software. Salesforce offers many other products including software for marketing automation, customer service automation, analytics, application integration, and enterprise collaboration among others. Salesforce is deeply entrenched within its customer base, has high retention, high recurring revenue, and is a scalable business with high free cash flow and margin potential. Salesforce reported solid earnings and provided several positive data points around its AI strategy.”
Overall, CRM ranks 5th on our list of AI stocks on Wall Street’s radar after DeepSeek breakthrough. While we acknowledge the potential of CRM, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an 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.
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Disclosure: None. This article is originally published at Insider Monkey.