We recently compiled a list of the 8 High Growth Software Stocks That Are Profitable In 2024. In this article, we are going to take a look at where Salesforce Inc. (NYSE:CRM) stands against the other high growth software stocks.
The Software Industry: An Analysis
The software market is experiencing robust growth, driven by various trends and technological advancements. According to Precedence Research, the global software market size reached $659.17 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 11.8% during 2024 – 2034 to reach $2.24 trillion by the end of the forecast period. In 2023, the North American region led the software market, holding a substantial share of 44%. The Asia-Pacific region is expected to witness significant growth during the forecast period.
A key factor influencing the market is the rise of artificial intelligence (AI). AI technologies are being integrated into software solutions to enhance efficiency and automate repetitive tasks. A study from Salesforce reveals that 85% of IT leaders expect AI to boost developer productivity over the next three years. This expectation underscores the growing recognition of AI’s role in streamlining workflows and optimizing software performance.
Another significant trend is the shift towards cloud-based software. Companies are migrating from traditional on-premises solutions to cloud services due to their flexibility, scalability, and cost-effectiveness. This transition allows businesses to access applications remotely and across various devices, which has become crucial in today’s digital landscape.
The 2024 AlgoSec State of Network Security report highlights a notable shift towards multi-cloud environments. The research, based on surveys conducted in H2 of 2022 and 2023, evaluated major players like AWS and Microsoft Azure. It indicates that security, continuity, and compliance are key factors driving organizations to adopt cloud platforms. While cloud adoption is growing, Azure remains the most popular platform, with AWS rapidly gaining ground.
The report also reveals that the move to remote work has significantly boosted Software-Defined Wide Area Networks (SD-WAN) deployment, dropping the percentage of organizations without SD-WAN from 55.2% in 2022 to 34% in 2023. Secure Access Service Edge (SASE) has become a popular solution for organizations by consolidating security functions into a unified cloud service. Additionally, firewall implementation has surged, with only 7.1% of respondents reporting no firewalls in 2023, down from 28.4% in 2022. This trend reflects a growing focus on securing cloud networks against external threats.
With an overview of the global software market in mind, let’s take a look at the 8 high-growth software stocks that are profitable in 2024.
Methodology
To compile our list of the 8 high-growth software stocks that are profitable in 2024, we used stock screeners from Finviz and Yahoo Finance. We sorted our results based on market capitalization and picked the top 50 largest software companies by market cap.
To narrow down our list to high-growth software stocks, we focused on companies with a compound annual growth rate (CAGR) in net revenue exceeding 18% over the past 5 years.
Next, we focused on profitability. From this initial list of high-growth software stocks, we narrowed our choices to stocks that had positive trailing twelve-month (TTM) net income and stocks that have grown their net income positively over the past 5 years.
To ensure the reliability of our findings, we consulted reputable sources such as SeekingAlpha, which provided insights into the net income CAGR and revenue CAGR over the past five years, and YCharts, which offered information on TTM net income.
Finally, from this list of high-growth software stocks that met our criteria, we focused on the top 8 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 8 high-growth software stocks that are profitable in 2024 are ranked below in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? 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)
TTM Net Income: $5.63 Billion
5-Year Net Income CAGR: 42.75%
5-Year Revenue CAGR: 19.88%
Number of Hedge Fund Holders: 117
Salesforce Inc. (NYSE:CRM) is a leading American cloud-based software company that specializes in customer relationship management (CRM) software and applications that cover sales, customer service, marketing, e-commerce, analytics, and application development. As the world’s top AI CRM platform, Salesforce serves over 150,000 businesses with its cloud-based software solutions.
The company is making significant strides in transforming enterprise software with its new Agentforce AI platform. This innovative platform allows businesses to create and customize autonomous agents, which can automate workflows across various functions such as sales, service, and marketing. By integrating its core technologies with AI capabilities, Salesforce is enhancing customer interactions and improving overall efficiency. The company has already seen impressive results, signing 1,500 AI deals in its second quarter fiscal 2025, reflecting strong demand for its AI-driven solutions.
Recently, Salesforce Inc. (NYSE:CRM) announced that it has signed a definitive agreement to acquire Tenyx, a developer of AI-powered voice agents. This acquisition will enhance the company’s autonomous agent capabilities and improve customer service interactions.
For Q2 2025, Salesforce reported a revenue of $9.33 billion, an 8% increase year-over-year. The company’s operating cash flow reached $892 million, up 10% year-over-year. In Q2, the number of paid customers increased by 130% compared to the same time last year, and the count of customers spending over $1 million each year almost doubled. Salesforce Inc. (NYSE:CRM) returned $4.3 billion to shareholders through share repurchases and issued nearly $400 million in dividend payments to stockholders.
These results underscore the company’s strong financial performance and commitment to leveraging AI for future growth.
Remaining performance obligations (RPO), which indicate all future revenue under contract, reached $53.5 billion at the end of Q2 2025, marking a 15% increase year-over-year.
Over the past five years, Salesforce Inc. (NYSE:CRM) has grown its revenue at a compound annual growth rate (CAGR) of 19.88%, while its net income has increased at a CAGR of 42.75% during the same period.
According to Insider Monkey’s Q2 2024 database of over 900 hedge funds, 117 hedge funds held stakes in Salesforce Inc. (NYSE:CRM).
Parnassus Investments stated the following regarding Salesforce Inc. (NYSE:CRM) in its “Parnassus Growth Equity Fund” second quarter 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 CRM ranks 1st on our list of the high growth software stocks that are profitable in 2024. While we acknowledge the potential of CRM as an investment, our conviction lies in the belief that 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.