Morgan Stanley (MS) upgraded Salesforce (CRM) to “overweight” and gave the company a $350 price target. The Morgan Stanley analyst expects Salesforce’s AI app to increase data cloud demand in the second half of 2024.
Yahoo Finance’s Brad Smith and Seana Smith discuss Morgan Stanley’s note. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
[AUDIO LOGO]BRAD SMITH: Another company is riding the generative AI wave. Morgan Stanley out with a new note on Salesforce upgrading the stock to overweight from equal weight and raising its price target to $350, the first time the firm has been positive about the company since this summer. The analyst behind the note said he’s expecting Salesforce’s AI app to ramp up demand for its Data Cloud in the second half of 2024.
So this significant year, the firm talking about several vectors that they see driving some of the upside to the top line versus the investor expectations, investor growth expectations, which they believe are muted. The analysts saying here, particularly though what is catching the eye, Salesforce’s Data Cloud offering. Traction earlier as an organization might look to prep their data for generative AI. Also, they’re talking about this unrivaled breadth of office, front office workflows as well here. This is the company that’s essentially been leaning as far as it possibly can into something similar of a generative AI co-pilot for a lot of its portfolio clients.
SEANA SMITH: Yeah, certainly. And their selling points there is all about safety and responsibility within AI to corporations in terms of trying to differentiate themselves from some of the other products that are out there, when you take into account some of the other leaders within this space. Morgan Stanley though seeing it as well positioned on a valuation basis because they’re saying that low investor expectations versus the potential for the top line upside, it makes it one of the more attractive plays within the software space right now and also makes it an attractive risk-reward set up here for Salesforce.
Now, it is important to point out in terms of sales and demand for its products, the analyst there, Keith Weiss, and noting that he doesn’t see generative AI app demand to be likely here until the second half of the year. But he does think Salesforce is well positioned going into 2024 because of the fact that companies are going to have to budget and prioritize. And we will likely see some traction earlier as organizations do prep some of their data for gen AI, leaving names like Salesforce well positioned. As we know, generative AI is going to be or is top of mind for CEOs across the spectrum, across industries. And in terms of their top investment priorities for 2024, a number of recent surveys including the recent one from KPMG talking about how AI is playing a huge role in 2024 for companies.
BRAD SMITH: CRM stock almost 100% higher year to date here. I believe about 96% based on what I’m seeing right now. And there, you’re taking a look at it on your screen. Hey, 100% year to date.
Source: finance.yahoo.com
