Billionaire Phillipe Laffont’s Top 10 “Mostly AI” Stock Picks

4. Salesforce, Inc. (NYSE:CRM)

Morgan Stanley analyst Keith Weiss believes that Salesforce’s PEG ratio of 1.2 indicates that the market has yet to price in operational discipline and earnings growth sustainability and has therefore given it an Overweight with a $320 price target. Similarly, an analyst at Mizuho Securities Gregg Moskowitz states that the company still is well positioned to help customers in digital transformation but needs to prioritize profitable growth. The analyst reiterated his Buy rating on the stock with a price target of $300.

According to Insider Monkey, Fisher Asset Management is a prominent investor in Salesforce, Inc. (NYSE:CRM) holding 10.8 million shares valued at around $3 billion and Coatue Management holds 4.7 million shares worth $1.4 billion.

Harding Loevner Global Equity Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its first quarter 2024 investor letter:

“Leading software companies have the advantage of high switching costs and the ability to incorporate new features into products customers already use. For example, Microsoft has added its Copilot chatbot functionality to everything from search (Bing Chat, recently renamed to just Copilot) to coding (GitHub Copilot) and workplace applications (Copilot for Microsoft 365). Software sold by Microsoft and other companies such as Salesforce, Inc. (NYSE:CRM), SAP, and ServiceNow are also already deeply integrated into their customers’ operations and workflow.

As large enterprises search for the right balance, Salesforce’s Data Cloud, a flagship offering, is designed to address a critical issue for them so they can make better use of AI tools. After a hectic buildout over the last few years of “data warehouses” and “data lakes”—two types of repositories for storing and processing data—across the various business units of large companies, many companies are left with what feels like islands of trapped data. Data Cloud solves this by creating a single platform to access and leverage all of an enterprise’s data, eliminating the need to constantly duplicate large amounts of information across different platforms. Users are then able to apply generative-AI technology, such as Salesforce’s Einstein tool, to a more comprehensive dataset, which enables them to better glean customers’ intentions, personalize marketing messages, and automate the processing of customer-service requests. As users build these systems, Einstein’s copiloting functionality helps their programmers work more efficiently so that IT departments with limited budgets and manpower can still develop the necessary tools. Salesforce’s management projects that revenue and earnings will climb about 9% and 45%, respectively, in fiscal 2025, citing the company’s operating leverage and cost discipline. We think these figures are achievable given the renewed focus on profitable growth, and so we added to the stock during the quarter.”