Salesforce (NYSE:CRM) stock is in the midst of a nice rally that brought it up more than 58% off its December lows. Looking ahead, CRM stock’s rally could have room to run as investors better appreciate the power of its ecosystem with AI tacked on. Undoubtedly, AI hype has been the talk of the town lately.
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It seems like almost every firm has a lot to gain by chiming in on AI during conference calls. Unlike most other firms that move higher on AI news, Salesforce actually seems like a firm that could realistically profit by a great deal as new AI-powered innovations land. I view the firm as one of the most underrated AI innovators in mega-cap tech. For this reason, I’m staying bullish on Salesforce.
Salesforce Could be a Bigger AI Beneficiary Than the Market Thinks
Not to discount the recent run in Salesforce stock, but I still think the firm may not be getting enough credit for its powerful AI muscles. The company isn’t just hopping aboard the AI bandwagon like a lot of firms (including those outside of the technology sector) are these days.
How many times have we heard CEO Marc Benioff refer to the Fourth Industrial Revolution over the years? Probably too many to count.
Like Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), which unveiled a slew of impressive AI products at its I/O event on Wednesday, Salesforce has been working with AI for many years. It’s only since ChatGPT went live that everyday investors have taken notice. These days, those two words can generate a considerable amount of hype in places where it’s warranted and not. Regarding Salesforce, I think new AI products could help the stock keep its rally running strong.
Just this week, Salesforce pulled the curtain on two more tools that make good use of generative AI technology — Tableau GPT and Tableau Pulse. The two tools are impressive offerings that could really help give the field of data analytics a nice boost.
Indeed, Tableau is already a very popular and powerful data visualization platform among data-driven professionals. It’s pretty much become an industry standard. As new AI and automation tools are introduced, the platform might be in a spot to move head and shoulders above the competition — if it isn’t already.
Salesforce’s Ecosystem Could Strengthen with Every New AI Product
The latest AI-harnessing Tableau tools come more than a week after Salesforce unveiled SlackGPT, a chatbot packed with impressive features. From summarizing messages to taking notes, SlackGPT can save a lot of workers time in their workday so they’re able to focus on the “meat” of their work.
It’s products like SlackGPT that could provide a huge boon to enterprise productivity. Though many may have punished Salesforce for its acquisition of the popular platform a few years ago, it’s now becoming apparent how the cloud behemoth plans to bring out the best in Slack and its other software acquisitions.
Earlier this year, when Salesforce stock was in the gutter, there were some activist calls for Salesforce to divest recent acquisitions such as Slack and Tableau. Looking back, I believe such divestiture calls should now be viewed as questionable, given how much more valuable the platforms could be in Salesforce’s AI-savvy hands.
Slack and Tableau fit nicely in the Salesforce ecosystem. With AI considered, Salesforce may have a foundation it needs to reaccelerate growth on the other side of a potential recession.
Looking ahead, I don’t expect that the pace of new innovations will stop anytime soon. At this juncture, it’s tough to gauge just how much “AI hype” has contributed to the stock’s recent run. In any case, I view CRM stock as modestly valued at current levels, given its footing in the AI race.
At writing, the stock trades at 6.4 times price-to-sales (P/S) compared to its five-year average of 8.5 times. As the company moves forward with new innovations while taking steps to improve its operational efficiencies (perhaps the firm could use its own AI innovations to help reduce costs and drive productivity), CRM stock could find the wind shift from facing its head to its back.
Is CRM Stock a Buy, According to Analysts?
Turning to Wall Street, CRM stock comes in as a Moderate Buy. Out of 37 analyst ratings, there are 25 Buys, 11 Holds, and one Sell recommendation.
The average Salesforce stock price target is $223.21, implying upside potential of 10.6%. Analyst price targets range from a low of $145.00 per share to a high of $320.00 per share.
The Takeaway
It didn’t take long for CRM stock to get its groove back. Over the coming quarters, I’d look for investors to really change how they view the company as it goes big on AI innovations.
