Salesforce Faces Growth Potential and Risks from AI Focus
-
Salesforce's Einstein AI provides capabilities like predictive scoring, recommendations, automation, and analysis across Salesforce products. Retail AI market has high expected growth, benefiting CRM.
-
Valuation is very high based on P/E ratios compared to sector and peers, indicating significant risk. My DCF analysis suggests limited margin of safety.
-
AI market growth expectations could disappoint, presenting downside risk if overallocated. Faced activist investor pressures in 2023, now easing.
-
Q4 earnings on Feb 28 expected to show strong growth versus last year. Full-year revenue guidance increased 11% and operating cash flow guidance 30-33% YoY.
-
CRM is a top stock for AI exposure, but valuation risk means my rating is Buy not Strong Buy. Allocation should be weighed against risk.