We recently published a list of Top 10 AI Stocks to Watch In February. In this article, we are going to take a look at where Salesforce, Inc. (NYSE:CRM) stands against other top AI stocks to watch in February.
Barry Bannister, Stifel’s chief equity strategist, said in a latest program on CNBC that the macroeconomic factors are finally catching up to the AI-led bull market. He expects inflation to remain sticky and no further rate cuts from the Federal Reserve in the short term. The analyst also rejected the notion that the massive tech selloff after the launch of DeepSeek was a buying opportunity.
“Over 30 years ago, we used to joke about how technology was such a displacement event business where new competitors would come in and destroy the entrenched stocks, that it deserved a lower multiple because of that. It’s a short life cycle business that’s got a very short competitive advantage period. But investors forgot about that. They bid up the stocks. The growth relative to value large-cap total return, one divided by the other on a 10-year compound basis, reached the absolute outer limits of the past 90 years. And that exact limit line is exactly where it peaked—the price earnings multiple and the outperformance of growth. So, for us, it’s just a very bubbly market that’s just gotta take some air out of it.”
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For this article, we chose 10 AI stocks currently making moves in the market. With each stock, 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: 116
Piper Sandler recently gave Salesforce, Inc. (NYSE:CRM) an Overweight rating and set its price target at $405. However, Piper Sandler believes that significant revenue from its AI agents is still a year away.
“Agentforce has renewed customer engagement, but it likely won’t become a major revenue driver until fiscal 2027 (calendar year 2026),” analysts at Piper Sandler, led by Brent Bracelin, wrote in an investor note.
According to Piper Sandler and Gartner data, Salesforce holds a 19.1% average share of the total addressable market in sales, marketing, commerce, and support, more than twice the combined market share of Oracle (ORCL), Microsoft (MSFT), and HubSpot (HUBS).
“Considering 64% of the market remains outside of the top 8 vendors, there’s significant room for Salesforce to gain further share, especially as AI drives more consolidation,” Bracelin noted.
He added that AI agents could boost subscription growth in the medium term, especially if they help drive multi-cloud cross-selling and increase ARPU through a premium mix.
Montaka Global Investments stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q4 2024 investor letter:
“There are multiple structural trends in the enterprise software space, including (i) the ongoing cloud migrations and digital transformations of enterprises, and (ii) the infusion of AI into software applications.
While the former remains in its early innings (80-85% of enterprise workloads still reside ‘on-premise’ – many of which will ultimately move to public clouds), the latter remains in its infancy.
Given all the hype of late, it’s hard to fathom that large-scale deployments of AI-based enterprise applications have barely even started. It’s all still to come. And we believe 2025 will be the first year that we really start to see meaningful deployments and adoption of these kinds of applications.
Consider another of our top 10 holdings, Salesforce, for example. Its revenue growth is at a cyclical low. Indeed, at just +8% per annum, as reported in the company’s most recent quarter, its rate of revenue growth has never been lower.
But in 2025, not only will price increases that were announced two years ago boost Salesforce, Inc.’s (NYSE:CRM) revenue growth, but the year will also mark the early stages of adoption of the company’s new ‘Agentforce’ (released only weeks ago). This is a new platform that lets businesses build and deploy their own custom AI agents to automate tasks, improve efficiency, and enhance customer experiences…” (Click here to read the full text)
Overall, CRM ranks 6th on our list of top AI stocks to watch in February. 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 time frame. 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.
