Bank of America showered Club holding Salesforce with praise in an upbeat note about software stocks. The news BofA analysts expect 2025 to be a strong year for software stocks, and Salesforce is among their “top buys” within the group. The maker of customer relations management software is a “top AI beneficiary,” as the company rolls out its new suite of automation tools dubbed Agentforce, analysts argued. With Agentforce, companies can create so-called AI agents that can autonomously complete tasks across their customer service, marketing and sales departments. “We believe [Salesforce] stock is likely to rerate higher with reaccelerating topline growth and sustainable margin expansion,” Bank of America analysts wrote to clients Tuesday. Shares of Salesforce rose more than 2.5% on Tuesday — the top performer in the Dow Jones Industrial Average and outperforming the tech-heavy Nasdaq ‘s modest advance In Salesforce’s fiscal 2026, which starts in February, and fiscal 2027, analysts see Agentforce delivering between 1 to 2 percentage points of revenue expansion. On top of that, they said an improved spending environment from clients on front-office software more generally could contribute a similar amount of growth. That should enable Salesforce to further expand margins — in a continuation of its major profitability push in recent years — and grow free cash flow north of 20% “in each of the coming three years,” analysts wrote. Big picture Salesforce is leaning hard into Agentforce, part of a broader trend within the tech industry toward so-called AI agents, which are seen as the next wave of generative AI beyond chatbots like ChatGPT from OpenAI and Copilot from fellow Club name and Dow component Microsoft . The platform was showcased at Salesforce’s splashy annual Dreamforce conference in mid-September, and the rollout has helped improve Wall Street sentiment on the stock. Salesforce shares have gained roughly 26% since Sept. 18, while a popular exchange-traded fund tracking the tech industry known as the XLK has added less than 5% during the same stretch. Salesforce CEO Marc Benioff said in December that the company had already inked more than 1,000 deals for Agentforce and intended to hire 2,000 people to help sell its AI software. Benioff has been critical of Microsoft’s Copilot. Microsoft, which has introduced its own AI agents, is forming a new artificial intelligence group to build and run apps for customers. Bank of America’s note represents the latest piece of positive commentary on Agentforce . Last week, Goldman Sachs also said Salesforce’s stock has the opportunity to command a higher multiple, a sign of investor confidence. Not everyone is buying in, though. Guggenheim Securities downgraded Salesforce to a sell rating from a hold-equivalent on Jan. 6, expressing concerns about Agentforce monetization and the company’s growth rate in the upcoming fiscal year. Bottom line Bank of America’s commentary on Salesforce is “important,” according to Jim Cramer. The analysts echo our belief that Salesforce will be able to deliver both better revenue growth and better profits this year, boosted by AI spending. As Jim noted during last month’s Monthly Meeting , the hiring that Salesforce is doing to support the launch of Agentforce should be seen as a bullish sign of the demand environment. (Jim Cramer’s Charitable Trust is long CRM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A sign is posted at Salesforce headquarters in San Francisco, California, Feb. 28, 2024.
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Bank of America showered Club holding Salesforce with praise in an upbeat note about software stocks.
