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Salesforce (CRM) Surges 60% YTD: What's Behind This Rally?
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Salesforce (CRM - Free Report) stock has made a remarkable comeback this year after a massive sell-off in 2022. With a year-to-date (YTD) gain of 59.6%, CRM stock has outperformed the broader equity indexes, Nasdaq Composite, The Dow Jones Industrial Average and the S&P 500, increasing 32%, 3.8% and 16.1%, respectively.
It has also surpassed the gains of Technology Select Sector SPDR (XLK), the most important component of the broad market index, which has increased 40% YTD.
Why Is CRM Stock Rallying?
We believe that Salesforce’s impressive growth profile is attracting investors. CRM has been benefiting from the strong adoption of its cloud-based products and solutions as customers are undergoing a major digital transformation amid the ongoing hybrid work environment. Its ability to provide an integrated solution for customers’ business problems is the key driver.
Per a Grand View Research report, the global CRM software market is projected to witness a CAGR of 13.9% during the 2023-2030 period. With its SaaS-based CRM and social enterprise applications, we believe Salesforce is well-positioned to lead the market.
Additionally, the cloud-based customer relationship management software provider’s sustained focus on acquisitions and partnerships is helping it enhance its product offerings and expand across newer markets. The buyouts of Slack, Tableau, ClickSoftware, Mulesoft, Datorama and CloudCraze over the last couple of years have been beneficial for the company.
Salesforce's partnership agreements with the likes of Amazon and Google’s parent Alphabet for the firms’ cloud services have been helping it expand its international operations. The company also entered into an alliance with Apple through which it is offering new apps for iPhones and iPads.
Accelerated digital transformation and a sustained focus on acquisitions and partnerships are driving its revenues. Salesforce’s revenues more than doubled from $13.3 billion in fiscal 2019 to $31.4 billion in fiscal 2023.
The company’s first-quarter fiscal 2024 revenues increased 11% year over year to $8.25 billion. Moreover, it targets to achieve annual revenues of $50 billion in fiscal 2026.
Betting on Generative AI for Long-Term Growth
Salesforce is currently focusing on incorporating generative artificial intelligence (AI) tools across its products as it looks to keep its business ahead of rivals. Generative AI is a type of AI technology that can produce various types of content, including text, imagery, audio and synthetic data. It is driven by a large language model, which means it uses a lot of data to understand and generate conversations.
The company forayed into the generative AI space with the launch of Einstein GPT in March 2023. Einstein GPT is the world’s first generative AI CRM (Customer Relationship Management) technology, which delivers AI-created content across every sales, service, marketing, commerce and IT interaction at hyperscale. With Einstein GPT, the company will transform customer experience with generative AI.
Upping its ante in the space, last month, Salesforce launched its AI Cloud service, which the company claims is a one-stop AI-powered solution for enterprises looking to enhance productivity. Salesforce stated that its AI Cloud is a suite of services that delivers enterprise-ready real-time, open and secure generative experiences across all applications and workflows. The suite will power new capabilities across CRM’s products, including Einstein service, data analysis software Tableau and workplace-messaging app, Slack.
Generative AI technology is finding applications in marketing, advertising, drug development, legal contracts, video gaming, customer support and digital art. This has sparked AI competition among the world’s biggest tech players, including Intuit (INTU - Free Report) , ServiceNow (NOW - Free Report) and Adobe (ADBE - Free Report) .
In June 2023, Intuit expanded its platform architecture with the introduction of a proprietary generative AI operating system — GenOS. This will enable the company to design, build and deploy breakthrough generative AI experiences for millions of customers, including small businesses. It will also help customers solve their financial challenges.
ServiceNow recently launched generative AI capabilities — ServiceNow Generative AI Controller and Now Assist for Search — for the Now platform that helps deliver faster and more intelligent workflow automation.
The digital media solutions provider, Adobe, aggressively expanded its footprint in the generative AI space through partnerships and new solutions. Adobe has unveiled a family of generative AI models, Firefly, focused on the generation of texts and images. Per the company, Firefly will offer more precision, speed, power and ease in content creation. It will let users of various experience levels create high-quality images and stunning text effects.
At present, Salesforce sports a Zacks Rank #1 (Strong Buy), while Intuit, ServiceNow and Adobe each carry a Zacks Rank #3 (Hold). Shares of INTU, NOW and ADBE have rallied 16%, 44.9% and 44.1%, respectively, YTD. You can see the complete list of today's Zacks #1 Rank stocks here.
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Salesforce (CRM) Surges 60% YTD: What's Behind This Rally?
Salesforce (CRM - Free Report) stock has made a remarkable comeback this year after a massive sell-off in 2022. With a year-to-date (YTD) gain of 59.6%, CRM stock has outperformed the broader equity indexes, Nasdaq Composite, The Dow Jones Industrial Average and the S&P 500, increasing 32%, 3.8% and 16.1%, respectively.
It has also surpassed the gains of Technology Select Sector SPDR (XLK), the most important component of the broad market index, which has increased 40% YTD.
Why Is CRM Stock Rallying?
We believe that Salesforce’s impressive growth profile is attracting investors. CRM has been benefiting from the strong adoption of its cloud-based products and solutions as customers are undergoing a major digital transformation amid the ongoing hybrid work environment. Its ability to provide an integrated solution for customers’ business problems is the key driver.
Salesforce Inc. Price and Consensus
Salesforce Inc. price-consensus-chart | Salesforce Inc. Quote
Per a Grand View Research report, the global CRM software market is projected to witness a CAGR of 13.9% during the 2023-2030 period. With its SaaS-based CRM and social enterprise applications, we believe Salesforce is well-positioned to lead the market.
Additionally, the cloud-based customer relationship management software provider’s sustained focus on acquisitions and partnerships is helping it enhance its product offerings and expand across newer markets. The buyouts of Slack, Tableau, ClickSoftware, Mulesoft, Datorama and CloudCraze over the last couple of years have been beneficial for the company.
Salesforce's partnership agreements with the likes of Amazon and Google’s parent Alphabet for the firms’ cloud services have been helping it expand its international operations. The company also entered into an alliance with Apple through which it is offering new apps for iPhones and iPads.
Accelerated digital transformation and a sustained focus on acquisitions and partnerships are driving its revenues. Salesforce’s revenues more than doubled from $13.3 billion in fiscal 2019 to $31.4 billion in fiscal 2023.
The company’s first-quarter fiscal 2024 revenues increased 11% year over year to $8.25 billion. Moreover, it targets to achieve annual revenues of $50 billion in fiscal 2026.
Betting on Generative AI for Long-Term Growth
Salesforce is currently focusing on incorporating generative artificial intelligence (AI) tools across its products as it looks to keep its business ahead of rivals. Generative AI is a type of AI technology that can produce various types of content, including text, imagery, audio and synthetic data. It is driven by a large language model, which means it uses a lot of data to understand and generate conversations.
The company forayed into the generative AI space with the launch of Einstein GPT in March 2023. Einstein GPT is the world’s first generative AI CRM (Customer Relationship Management) technology, which delivers AI-created content across every sales, service, marketing, commerce and IT interaction at hyperscale. With Einstein GPT, the company will transform customer experience with generative AI.
Upping its ante in the space, last month, Salesforce launched its AI Cloud service, which the company claims is a one-stop AI-powered solution for enterprises looking to enhance productivity. Salesforce stated that its AI Cloud is a suite of services that delivers enterprise-ready real-time, open and secure generative experiences across all applications and workflows. The suite will power new capabilities across CRM’s products, including Einstein service, data analysis software Tableau and workplace-messaging app, Slack.
Generative AI technology is finding applications in marketing, advertising, drug development, legal contracts, video gaming, customer support and digital art. This has sparked AI competition among the world’s biggest tech players, including Intuit (INTU - Free Report) , ServiceNow (NOW - Free Report) and Adobe (ADBE - Free Report) .
In June 2023, Intuit expanded its platform architecture with the introduction of a proprietary generative AI operating system — GenOS. This will enable the company to design, build and deploy breakthrough generative AI experiences for millions of customers, including small businesses. It will also help customers solve their financial challenges.
ServiceNow recently launched generative AI capabilities — ServiceNow Generative AI Controller and Now Assist for Search — for the Now platform that helps deliver faster and more intelligent workflow automation.
The digital media solutions provider, Adobe, aggressively expanded its footprint in the generative AI space through partnerships and new solutions. Adobe has unveiled a family of generative AI models, Firefly, focused on the generation of texts and images. Per the company, Firefly will offer more precision, speed, power and ease in content creation. It will let users of various experience levels create high-quality images and stunning text effects.
At present, Salesforce sports a Zacks Rank #1 (Strong Buy), while Intuit, ServiceNow and Adobe each carry a Zacks Rank #3 (Hold). Shares of INTU, NOW and ADBE have rallied 16%, 44.9% and 44.1%, respectively, YTD. You can see the complete list of today's Zacks #1 Rank stocks here.