We recently published a list of 10 Trending AI Stocks to Watch for the Rest of 2024. Since Salesforce Inc (NYSE:CRM) ranks 8th on the list, it deserves a deeper look.
Chris Hyzy, Merrill & Bank of America Private Bank chief investment officer, said while talking to CNBC in a latest program that there is “ a lot of momentum” behind the market rally. The analyst said that to gauge how much momentum we have behind the optimism, we need to analyze the “wedge” in the market.
“The biggest wedge that was in the market last year and in 2022 was inflation. That’s beginning to go away. It’s almost to the fact that no one’s is talking about whether or not we are going to have inflation that’s worrisome.”
Hyzy said that the Fed easing its fiscal policy and now China “joining the party” will be two key tailwinds for the market.
Answering a question about the hard landing vs soft landing debate, the analyst said we should look beyond the two possibilities as he believes there are many other scenarios to consider in between these two outcomes.
“We have a lot of components of a soft landing. I’d like to say it’s more of a mid-cycle slowdown with easier financial conditions that should actually create a profit revision to the upside not downside,” Hyzy added.
For this article we picked top 10 trending AI stocks on the back of latest news and analyst ratings. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Photo by Austin Distel on Unsplash
Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Investors: 117
Salesforce (NYSE:CRM) is trending after Piper Sandler upgraded the stock citing a promising risk-reward profile and significant potential in artificial intelligence.
Analyst Brent Bracelin noted in an investor note, “We are upgrading CRM to Overweight based on a favorable risk-reward given the potential for free cash flow per share to double to over $20 by FY2029 from $9.65 in FY2024, even if top-line growth remains at subdued levels of 8-9%.” He also raised his price target for Salesforce to $325 from $268.
Bracelin highlighted that the introduction of Agentforce could also help stabilize demand.
“Salesforce has historically provided new platform updates three times a year,” Bracelin mentioned. “The pace of AI has changed this cadence, particularly with Data Cloud, which now sees monthly updates. Agentforce, a result of these innovations, will be generally available next month, with early production already underway involving companies like Gucci and Wiley.”
Salesforce Inc (NYSE:CRM) is trending after beating second-quarter estimates and raising its full-year profit guidance to $10.03 to $10.11 per share from $9.86 to $9.94 per share.
In the second quarter, Salesforce’s revenue rose 8% year over year while gross profits jumped 10%.
Salesforce Inc (NYSE:CRM) is also on investors’ radar because of its acquisitions. The company recently agreed to acquire AI voice agent firm Tenyx. This acquisition follows Salesforce’s strategic partnership with Workday to develop an AI-powered assistant for employees. The company has also agreed to buy SaaS data protection startup Own for $1.9 billion in cash.
Wall Street expects $11.12 per share in profits for Salesforce Inc (NYSE:CRM) next year, representing a 10% year-over-year increase. For the current financial year, profits are expected to grow by 23%, with estimates trending upwards. Based on these forecasts, Salesforce trades at a forward price-to-earnings ratio of 22, which is attractive given the AI-related growth catalysts.
Parnassus Growth Equity Fund stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“Salesforce, Inc.’s (NYSE: CRM) growth continues to moderate, and investors question its prospect as it relates to AI. We remain confident that the company, which developed the original salesforce automation product and pioneered the SaaS (software as a service) delivery model, is well positioned to capitalize on emerging AI opportunities.”
Overall, Salesforce Inc (NYSE:CRM) ranks 8th on Insider Monkey’s list titled 10 Trending AI Stocks to Watch for the Rest of 2024. While we acknowledge the potential of Salesforce Inc (NYSE:CRM), our conviction lies in the belief that 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.
