Salesforce (New York Stock Exchange: CRM) The stock is in the midst of an impressive rally, up more than 58% from its December low. Going forward, there could be more room for CRM stocks to rise as investors appreciate the power of the AI-plus CRM ecosystem more. Arguably, the AI hype is all the rage these days.
Nearly every company seems to have a lot to gain from discussing AI during conference calls. Unlike most other companies that climb the ranks in AI news, Salesforce actually looks like a company that could realistically benefit greatly from new AI-powered innovations. I see the company as one of the most underrated AI innovators in mega-tech. Because of this, I remain bullish on Salesforce.
Salesforce likely to benefit from AI more than the market thinks
I don’t mean to downplay the recent surge in Salesforce stock, but I still think the company is underappreciated for its powerful AI capabilities. The company isn’t just jumping on the AI bandwagon like many companies these days (even outside the tech sector).
How many times have you heard CEO Marc Benioff mention the Fourth Industrial Revolution? Probably too many to count.
like the alphabet (Nasdaq: Google)(Nasdaq: GOOG) unveiled a number of impressive AI products at its I/O event on Wednesday, but Salesforce has been working with AI for years. Since ChatGPT went live, ordinary investors have taken notice. These two words can cause quite a bit of hype these days, both in their rightful places and those they don’t. As for Salesforce, I think a new AI product could help keep the stock’s rally strong.
Just this week, Salesforce launched two more tools leveraging generative AI technology: Tableau GPT and Tableau Pulse. These two tools are impressive products that have the potential to give the field of data analytics a big boost.
In fact, Tableau is already a powerful data visualization platform that is very popular among data-driven professionals. It has almost become an industry standard. As new AI and automation tools are introduced, the platform may still be in a much better position than its competitors.
Salesforce’s ecosystem could be strengthened with each new AI product
The latest AI-powered Tableau tool comes just over a week after Salesforce launched SlackGPT, a feature-packed chatbot. From summarizing messages to taking notes, SlackGPT saves workers tons of time and allows them to focus on the “essence” of their work.
Products like SlackGPT have the potential to be a big boon to corporate productivity. While many may have blamed Salesforce for buying a popular platform a few years ago, it’s now time to see how the cloud giant is trying to get the best out of Slack and other software acquisitions. It’s becoming clear.
Earlier this year, when Salesforce stock hit rock bottom, there were activist voices calling for Salesforce to sell its recent acquisitions, including Slack and Tableau. In retrospect, I believe such a sale request should now be questioned given how much value the platform could have in the hands of AI-savvy Salesforce.
Slack and Tableau fit nicely into the Salesforce ecosystem. With AI in mind, Salesforce may have the foundation it needs to reaccelerate growth on the flip side of a potential recession.
Looking ahead, we don’t expect the pace of new innovation to stop anytime soon. At this point, it’s hard to gauge how much the “AI hype” has contributed to the recent rally in stocks. In any case, given its foothold in the AI race, I see CRM stock as a modest value at current levels.
At the time of writing, the company’s price-to-earnings ratio (P/S) is 6.4x, compared to its five-year average of 8.5x. As the company takes steps to improve operational efficiency while pushing new innovations (perhaps it can take advantage of its own AI innovations to help cut costs and boost productivity), CRM stocks turn from headwinds Wind direction may change.
Is CRM Stock a Buy, According to Analysts?
Looking at Wall Street, CRM stock is moderately buying. Of the 37 analyst ratings, there are 25 buy recommendations, 11 hold recommendations, and 1 sell recommendation.
Salesforce has an average price target of $223.21, suggesting 10.6% upside. Analysts are targeting the stock at a low of $145 a share and a high of $320 a share.
Take-out
It didn’t take long for CRM stocks to bounce back. Over the next few quarters, we hope to see a significant shift in how investors view the company, which is heavily committed to AI innovation.
Disclosure
