We recently compiled a list of the 12 Best Technology Stocks to Invest In for the Long Term. In this article, we are going to take a look at where Salesforce Inc. (NYSE:CRM) stands against the other technology stocks.
On January 1, King Lip, BakerAvenue Wealth Management’s chief strategist and partner, joined CNBC’s ‘Closing Bell’ to discuss market outlooks as we enter 2025. His focus was on the impressive performance of tech stocks in 2024, with expectations for a second consecutive year of double-digit gains. Lip was against the prevailing sentiment among investors that big tech has peaked and that funds should rotate into smaller stocks or other themes. He argued that the recent weakness in the tech sector is largely due to technical rebalancing rather than a fundamental downturn. He emphasized that cash is likely to flow back into leading tech stocks, as they are projected to deliver the highest earnings growth in 2025, with an anticipated earnings increase of over 20%.
Discussing high valuations in the tech sector, particularly for large-cap stocks trading at forward earnings multiples between 32 and 35 times, Lip countered that many valuations remain within one standard deviation of their historical norms over the past decade. He pointed out that the MAG7 have consistently provided strong returns and are well-positioned for future growth. Lip identified Broadcom as a top stock, praising its management under Hock Tan and its unique role in the market as a provider of custom AI chips. He noted that the company operates at a lower earnings multiple while benefiting from substantial growth.
Lip also discussed Palantir, which has garnered attention for its profitability and positive cash flow since becoming profitable two years ago; despite its high valuation exceeding 50 times revenue, he believes it is well-positioned to benefit from government spending cuts and AI initiatives. While acknowledging concerns about insider selling and high valuations for the company, Lip remains optimistic about its future potential, suggesting it could be more appealing if it drops to the mid-$60 range.
Lip is bullish on tech stocks in 2025 that will be driven by strong earnings growth and ongoing investments in AI infrastructure. The NASDAQ 100 index has performed remarkably well, achieving a return of 27% in 2024 following a staggering 53.8% return in 2023. This reflects a broader trend where major tech companies have outperformed traditional indices significantly, and with that being acknowledged, we’re here with a list of the 12 best technology stocks to invest in for the long term.
Methodology
To identify the best long-term tech stocks according to media, we sifted through financial media reports and watched Wall Street analysts’ appearances on the news. We compiled a preliminary list of 25 stocks first and then selected 12 stocks that were the most popular among elite hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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).
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 Holders: 116
Salesforce Inc. (NYSE:CRM) provides customer relationship management (CRM) technology that helps businesses manage customer interactions. In October 2024, it introduced Agentforce. This is an AI-powered platform for digital labor, which uses autonomous AI agents to enhance human capabilities.
In the third fiscal quarter of 2025, the company secured over 200 Agentforce deals. Several leading organizations, including FedEx, Adecco, Accenture, ACE Hardware, IBM, and RBC Wealth Management, are building their digital labor forces on the Salesforce Inc. (NYSE:CRM) platform, using Agentforce.
The company expects Agentforce to deflect 25-50% of cases, with potential for higher rates. It’s aggressively expanding its sales team, adding 1,400 Account Executives. Salesforce Inc. (NYSE:CRM) is prioritizing responsible AI and aims to lead the enterprise AI platform market.
Constellation Research’s Ray Wang recently emphasized the importance of software companies that use AI to serve customers who lack the expertise to develop their own AI solutions. Still, concerns are there as analyst Gil Luria warns of modest near-term AI revenue impact due to pricing concerns and the company’s scale. It raised its FQ4 2025 revenue guidance to $9.9-$10.10 billion, representing a growth of nearly 8%.
Salesforce’s growing AI integration, however, remains a key long-term driver. Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“In a tough backdrop for software companies, shares of Salesforce, Inc. (NYSE:CRM) cratered after the company reported quarterly results that surprised to the downside due to a tougher spending environment. The company reported revenue growth that missed on expectations, while also lowering its outlook for revenue growth, due to a more measured buying environment from its customers. Salesforce experienced elongated sales cycles, deal compression and elevated budget scrutiny, which pushed some deals to following quarters. Taking a step back, the company’s evolving AI story should not be overlooked as it is integrated across the company’s sprawling suite of cloud and digital assets.”
Overall CRM ranks 11th on our list of the best technology stocks to invest in for the long term. As we acknowledge the growth potential of CRM as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high 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.