On Friday, Goldman Sachs (NYSE:GS) maintained a bullish stance on Salesforce.com Inc (NYSE:CRM) stock, reiterating a Buy rating and a price target of $315. The firm's positive outlook is based on Salesforce's focus on a product slate heavy with generational artificial intelligence (Gen-AI) innovations.
Salesforce has introduced a new large language model (LLM) benchmarking tool tailored for customer relationship management (CRM) business cases, which is expected to assist customers in making informed decisions among various models.
Salesforce's new tool is designed to benchmark LLMs on four critical parameters: accuracy, cost, speed, and trust and safety. These factors are considered vital to sales and service business cases.
The company's approach is to pioneer the benchmarking of models specifically for business use cases, a move that distinguishes it from competitors who have traditionally focused on academic and consumer applications.
This development reflects Salesforce's commitment to providing value in the AI domain and its strategy to remain model-agnostic when it comes to Gen-AI models. The offering is seen as a natural alignment with Salesforce's long-standing dedication to innovation and customer service.
Goldman Sachs views Salesforce's latest announcement as a strategic step that underscores the company's role in setting industry standards. Such offerings are anticipated to become essential in the Gen-AI landscape, particularly as the custom and domain-specific model market grows, with examples like Databricks' Mosaic and Snowflake (NYSE:SNOW)'s Arctic gaining traction.
The firm's commentary indicates that Salesforce is experiencing a resurgence, with a strong shift towards product innovation. This focus is expected to support the company's sustained leadership in an industry experiencing a significant platform shift. Goldman Sachs' reiterated Buy rating and price target suggest confidence in Salesforce's direction and potential for growth.
In other recent news, Salesforce.com Inc. has reported an 11% year-over-year growth in its fiscal 2025 first-quarter earnings, with a revenue increase to $9.13 billion.
Despite facing economic challenges, the company has maintained its full-year revenue guidance at $37.7 billion to $38 billion. The company's subscription and support segment saw a 12% rise, contributing significantly to the overall performance.
Oppenheimer recently reaffirmed its confidence in Salesforce, maintaining an Outperform rating with a steady price target of $280.00. This endorsement comes after insightful discussions with Salesforce's Senior Vice President for Product Management, Generative AI and Search, Kaushal Kurapati.
Salesforce's Data Cloud has been a strong contributor to growth, with 25% of large deals including it. The company's international expansion and multi-cloud deals were also highlighted as growth levers.
For FY25, Salesforce projects non-GAAP operating margin of 32.5% and GAAP operating margin of approximately 20%, along with anticipated operating cash flow growth between 21% and 24%.
InvestingPro Insights
As Salesforce.com Inc (NYSE:CRM) continues to innovate in the AI space, real-time data from InvestingPro shows a company with a robust financial profile. The company boasts a substantial market capitalization of $234.3 billion and an impressive gross profit margin of 76.0% for the last twelve months as of Q1 2023, reflecting its efficiency and strong market position. Despite a higher earnings multiple with a P/E ratio of 43.15, Salesforce's commitment to innovation and strategic initiatives like the new LLM benchmarking tool could justify the valuation to investors looking for growth in the tech sector.
InvestingPro Tips for Salesforce highlight its perfect Piotroski Score of 9, indicating strong financial health, and its status as a prominent player in the software industry. However, it's worth noting that 28 analysts have revised their earnings downwards for the upcoming period, which may warrant investor caution. On the positive side, Salesforce is trading at a high EBITDA valuation multiple, which could be indicative of market confidence in its future profitability, supported by analysts predicting the company will remain profitable this year. For those interested in a deeper dive, InvestingPro offers additional tips on Salesforce, and users can take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Investors seeking a comprehensive understanding of Salesforce's potential can find over 12 additional InvestingPro Tips by visiting https://www.investing.com/pro/CRM. These insights could provide valuable context to Goldman Sachs' bullish stance and help investors make informed decisions in an evolving tech landscape.
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