Why Salesforce’s AI Foray Makes CRM Stock a Potential Gem

Stocks to buy

Many stock traders probably think of Salesforce (NYSE:CRM) as a customer relations management software specialist.

That’s not inaccurate, but Salesforce has multiple, deep connections to the artificial intelligence market.

So, while it won’t capture everyone’s attention, CRM stock might pique your interest and it deserves a solid “B” grade.

As we’ll discuss in a moment, the main reservation that some investor might have about Salesforce is its valuation.

Yet, forward-thinking traders shouldn’t obsess too much over traditional valuation metrics. The big picture looks positive for Salesforce, especially during a time when AI-compatible software is in high demand.

CRM Stock Is a Worthy AI Play

First, we must address the elephant in the room. Currently, Salesforce has a trailing 12-month price-to-earnings ratio of 131.72x. A triple-digit P/E ratio might be off-putting to some value-focused investors.

Thus, CRM stock isn’t right for everyone. On the other hand, Salesforce can still grow as a company and provide value to its customers and shareholders.

After all, many stock traders want AI market exposure in their portfolios. Salesforce doesn’t just operate in the CRM field; it’s also a leading-edge AI software developer.

The company launched its first AI product, called Einstein, back in 2016. And this year, Salesforce “released a host of new Einstein products to help customers get the most out of new generative AI technology.”

In addition, Salesforce recently acquired Airkit.ai, a “creator of AI powered customer service applications and experiences.” As Salesforce integrates Airkit.ai’s functionalities into its Service Cloud offerings, Salesforce’s clients will get access to fresh, generative AI-driven product experiences.

Salesforce Switches From Firing to Hiring

In other news, Salesforce proudly announced that, after having eliminated 10% of its workforce earlier this year, the company now plans to hire 3,300 new employees. This certainly sounds like a positive development for Salesforce, but the market’s response might surprise you.

Oddly enough, CRM stock slid from $219 to $205 in the days following the new hiring announcement. But then, this was a rough patch for technology stocks. So, perhaps the market wasn’t unhappy with Salesforce in particular.

CEO Marc Benioff was understandably glad to announce the new round of hiring. He expects this to help Salesforce “continue to achieve great margins.”

Chief Operating Officer Brian Millham set the tone for Salesforce’s potential future expansion. “We have some very successful parts of our business right now, and we want a surge in those areas,” Millham declared.

Value Can Have Different Meanings

If you’re obsessed with Salesforce’s P/E ratio, then you might not consider the shares to be a good value. In contrast, well-rounded investors may choose to view Salesforce’s value proposition differently.

After all, a growing company can be better positioned to serve its customers and shareholders. In that context, Salesforce can continue to provide ongoing value.

Plus, investors seeking exposure to cutting-edge generative AI technology should conduct their due diligence on Salesforce. All things considered, CRM stock gets a “B” grade and should be appropriate for a broad variety of investors’ portfolios.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.