Opinions Stockchase Insights
SalesForce.com Inc.CRMHOLDMay 31, 2024
Stockchase InsightsStock price when the opinion was issued
As of Jun 04, 2026. Market Open.
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Monitoring closely, given debate around AI and software. Beat on earnings this week, but guidance was a bit weaker than expected. If it falls below $160, she'd consider rotating out. Being patient, as upside potential is ~40%.
Brianne GardnerHe doesn't hate the stock here, and he owns some software stocks, but they all live under the cloud that AI will threaten their business. When they report today, if they can assure the market in their guidance that their customers are using their AI products, then this is the answer to putting a floor to these software-apocalypse news. If they don't, there will be new lows.
Still owns, but watching closely as the competitive landscape continues to evolve. Next leg of growth tied to AI, and that's where the debate is. AI is lowering barriers to entry, so market's reassessing its moat. Execution will be critical.
Strong support from a technical level. If it drops further, she'll sell and take the loss. Right now it's wait-and-see.
Brianne GardnerIt will take time to play out, longer than the market expects. But these software companies are operating very strongly. Enterprise software is more customized than mass-market software which meet specific needs. He prefers the former for their more durable moats. CRM's PE is very low, around 11x, and the company is doing lots of good things. Remember that LLMs (AI) are very expensive to create and run, and these companies need to partner with large companies. It could wind up that AI companies partner with software companies. He doesn't know how it well pay out, but possibly the large software companies could win.
Today they reported a robust top and bottom line beat, but their full-year forecast was a little light, so shares fell after hours. They will buy back $50 billion shares, or a quarter of their share count. Fears of the AI apocalypse are overblown, fears of wiping out the entire white-collar class are wrong. CRM is too entrenched to go under. Trades at only 15x PE.
(Note the short timeframe.) Still likes, and wants to give it time. Software space finally getting back to attractive valuations. AI disruption fears are a bit overstated; weakness is sentiment, not fundamental. This company is embedding AI into its platform. Still seeing strong demand for its tools.
Lots of FCF last quarter. She sees over 70% upside from here.
Brianne Gardner
(Note the short timeframe.) Didn't play out as she hoped, but still sees it doing well. Could be on the cusp of a technical turnaround. AI is embedded in how customers use the platform. Valuation remains reasonable at 22x forward PE. Strong cashflow, improving margins.
Brianne Gardner
We tend to be faily cautious of a company after an earnings guidance warnings and a large stock decline. The market is quite efficient in marking down large-cap names with weaker growth prospects, but also the guidance can give holders a 'reason' to sell over the next few months, especially if we see any general market weakness. This could result in a re-rate for the company as growth slows down. That being said, CRM is a well-established company with a diversified portfolio of products, and the company has been and will still be around for quite some time. CRM also just transitioned into a more shareholder-friendly company by announcing dividends, and doing more buybacks. Overall, we would see it as a HOLD, with potentially a slow accumulate BUY into further weakness over the balance of 2024. Some patience is going to be required here but ultimately we think it recovers.
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