We recently published a list of 10 AI Stocks to Watch on Latest News and Analyst Ratings. In this article, we are going to take a look at where Salesforce Inc (NYSE:CRM) stands against other AI stocks to watch on latest news and analyst ratings.
AI discussion boards online are buzzing with a new development where tech experts are pointing to a possible plateauing of performance in artificial intelligence applications.
CNBC’s Deirdre Bosa in a latest program quoted tech investor Ben Horowitz, who said in a recent podcast that he’s not seeing performance improvement despite increasing GPUs.
“We’re increasing GPUs at the same rate, but we’re not getting the intelligence improvements at all out of it.”
OpenAI is reportedly facing similar problems with its upcoming AI model.
“The Information reports that the quality increase in OpenAI’s upcoming advanced model, Orion, is smaller than the jump seen between the last two flagship models, GPT-3 and GPT-4. In other words, generational advancements may have peaked as the models are essentially running out of data to train on,” Bosa said.
While the next jump in AI performance is far away in the future, the possibilities this technology has unlocked based on the existing data and resources are keeping investors and Wall Street analysts busy.
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In this article we take a look at top AI stocks trending on the back of latest news and analyst ratings. 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).
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Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Investors: 117
The launch of Agentforce, a platform that enables businesses to create autonomous AI agents, could unlock a multi-billion-dollar opportunity for Salesforce Inc (NYSE:CRM), according to Stifel.
“There is still much Stifel doesn’t know – appetite for headcount displacement, timeline of agent adoption, who will be a serious competitor, etc. – so it is refraining from updating its model until it hears more from the company, early users, and more partners,” said Stifel analyst Parker Lane.
“However, Stifel’s math suggests Agentforce Service Agent alone could be a multi-billion-dollar opportunity for Salesforce,” Lane added.
Stifel has reiterated its Buy rating on Salesforce Inc (NYSE:CRM) and increased its price target on the stock to $350 from $320 as it considers Agentforce a catalyst.
“With the stock currently trading at ~18.4x Stifel’s FY26 FCF estimate, below large-cap peers trading at 20x-40x CY25 FCF estimates, it believes Salesforce’s current multiple discounts the potential durability of revenue growth through the new agent model,” Lane noted.
These agents, which can be used in areas such as customer service, sales, marketing, commerce, and healthcare, are designed to handle complex tasks and produce actionable outputs, Salesforce Inc (NYSE:CRM) says.
“Stifel is still uncertain about several factors—such as demand for workforce reduction, adoption timelines, and key competitors—and will hold off on updating its model until it gathers more information from Salesforce Inc (NYSE:CRM), early users, and partners,” stated Stifel analyst Parker Lane.
“Nonetheless, Stifel’s calculations suggest that Agentforce’s Service Agent alone could represent a multi-billion-dollar opportunity for Salesforce,” Lane added.
Stifel reaffirmed its Buy rating on Salesforce Inc (NYSE:CRM) and raised its price target to $350 from $320, seeing Agentforce as a significant growth driver.
“With the stock trading at about 18.4x Stifel’s FY26 free cash flow estimate, below large-cap peers that are trading at 20x-40x CY25 FCF estimates, Salesforce’s current multiple seems to underestimate the potential for sustained revenue growth through its new agent model,” Lane concluded.
Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q3 2024 investor letter:
“In the third quarter, we purchased new positions in Apple and Oracle and eliminated our small positions in Nike and Salesforce, Inc. (NYSE:CRM). We exited our position in Salesforce to fund better opportunities in Shopify and MSCI. Salesforce is seeing slower revenue growth than we would have expected, given the weakening macroeconomic environment. Furthermore, since its core end markets in customer relationship management (“CRM”) and Service are fairly mature, a lower growth level versus our expectations could persist for some time.”
Overall, CRM ranks 5th on our list of AI stocks to watch on latest news and analyst ratings. 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 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.