Salesforce Sees Price Boost as Cheap Way to Own AI Software
Salesforce (CRM) has been trading at an attractive price-to-earnings ratio of 14x forward earnings, despite significant growth in its Agentforce and Data Cloud annual recurring revenue (ARR). These metrics reached nearly $3.9B, up over 210% year-over-year.
While Microsoft (MSFT) trades at 25x forward earnings with 17.7% revenue growth, and ServiceNow (NOW) grows faster at 24%, but trades at 28x forward, Salesforce's price-to-earnings ratio is still below both peers at our target.
The company's $348 price target, set by 24/7 Wall St., carries a buy rating at 90% confidence. This thesis gets stronger if organic revenue reaccelerates in the second half as management expects.