Morgan Stanley’s Best Overweight & Quality Stocks: Top 25 Stocks

14. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders In Q2 2024: 117

Average Analyst EPS % Revision: 0.4%

Salesforce, Inc. (NYSE:CRM) is a software as a service (SaaS) firm that provides customer relationship management software. The firm was the biggest CRM software provider in the industry in 2023 as it commanded a 21.7% market share. Consequently, Salesforce, Inc. (NYSE:CRM)’s hypothesis is geared toward retaining market share and cost control as opposed to growth. Within the SaaS industry, the advent of AI has also seen investors shun firms that have not integrated the new technology into their operations. However, Salesforce, Inc. (NYSE:CRM) is not one of these companies, as its Data Cloud platform offers 8 trillion data points to enable customers to use AI to run their customer campaigns. Salesforce, Inc. (NYSE:CRM) also benefits from its sizeable market presence by managing 250 petabytes of data. Data is oil for the AI industry, and its resources provide Salesforce, Inc. (NYSE:CRM) a leg up in developing AI products. Yet, recurring revenue is another key variable for SaaS firms, and the company’s inability to grow its deal size could create headwinds.

Salesforce, Inc. (NYSE:CRM)’s management believes that Data Cloud can help it land big deals. Here’s what it said during the Q1 2025 earnings call:

“Data Cloud gives every company a single source of truth and you can securely power AI insights and actions across the entire Customer 360.

Now let me tell you why I’m excited about Data Cloud and why it’s transforming our customers and how it’s preparing them for this next generation of artificial intelligence. Data Cloud was included in 25% of our $1 million plus deals in the quarter. We added more than 1,000 data cloud customers for the second quarter in a row. 8 trillion records were ingested in the Data Cloud in the quarter, up 42% year-over-year and we processed 2 quadrillion records, that’s a 217% increase compared to last year. Over 1 trillion activations drove customer engagement, which is a 33% increase year-over-year. This incredible growth of data in our system and the level of transactions that we’re able to deliver, not just in the core system but especially in data cloud is preparing our customers for this next generation of AI.”