The “Magnificent Seven” is a moniker used to collectively describe a market-moving cluster of just a few of the world’s largest technology enterprises: Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms, and Tesla. Each is putting its own stamp on the unreal intelligence (AI) landscape, and all have received a great deal of attention from media outlets and investors alike.

But one other AI stock that gets less press has handily outperformed five of the Magnificent Seven over the past two years. Enterprise software leader and Dow Jones Industrial Average (DJIA) component Salesforce (CRM 0.30%) has gained a whopping 98% in just two years.

Even with that spectacular run-up behind it, I feel Salesforce’s next growth phase is just starting. In actual fact, given the lucrative opportunity the company has in AI, I feel Salesforce could possibly be the top-performing stock throughout the Dow next yr.

What with regard to the rest of the Dow Jones?

Asserting that Salesforce could possibly be the best performer throughout the Dow next yr is a daring claim. Despite all the pieces, what with regard to the opposite 29 firms?

The Dow is a curated index that encompasses a few of the world’s largest firms across most major industry sectors. In my opinion, each financial services and consumer goods stocks still carry some risk. Specifically, I see each of those industries as particularly vulnerable to macroeconomic forces including inflation and rates of interest. While inflation has been cooling for quite some time and the Federal Reserve has instituted an rate of interest tapering protocol, I don’t think the broader economy is type of out of the woods just yet.

Moreover, I feel energy stocks are going to experience excessive volatility in the intervening time. Broadly speaking, energy policies are prone to differ between which parties are accountable for Congress. Even after the outcomes of the 2024 election shake out next month, I could easily see energy stocks moving pretty dramatically depending on any policy changes that may go into effect.

This leaves the technology sector, where the DJIA includes major tech players including Amazon, Apple, Cisco, IBM, Intel, and Microsoft. While I’m bullish on Amazon and Microsoft, I feel each firms are facing a great deal of pressure and scrutiny to drive consistent impressive results, considering that they’ve each poured billions into their AI initiatives.

Meanwhile, Apple’s AI roadmap is in its early stages — making it hard to predict how its decisions will pan out. Unfortunately, I feel Intel’s best days may be behind it. And IBM and Cisco are stuck competing in saturated markets. For all of those reasons, I feel Salesforce has probably probably the most upside as compared with its peers.

An unlimited opportunity for Salesforce

In case you occur to’ve been being attentive to artificial intelligence narratives through the last couple of years, you’ve got heard the term “generative AI” ad nauseam. But what does it actually mean?

In easy terms, generative AI is software that has the aptitude to digest datasets to help answer complicated questions extremely quickly. When generative AI tools are at their best, employees across a corporation’s workforce are running sophisticated queries and creating robust data-driven dashboards — leading to enhanced productivity and efficiency. No more spinning your wheels and burning the midnight oil.

Actually one in every of the leading types of applications in generative AI instantly is the virtual agent. Microsoft has been an unlimited winner on this regard because of its CoPilot assistant, which runs on ChatGPT and has been integrated throughout the company’s ecosystem, spanning cloud computing, productivity tools, and software development.

Salesforce has taken note of Microsoft’s success and decided to challenge its big tech cohort. Enter Agentforce, a virtual assistant that may help customers with things similar to scheduling appointments, billing resolutions, cybersecurity threat evaluation, and a bunch of other use cases. Salesforce’s vision is to remove the friction of human-led customer support and permit AI-powered agents to resolve customers’ needs.

Salesforce already has a deep penetration amongst large-scale corporations and small and midsize enterprises because of its customer relationship management (CRM) platform, data analytics tools powered by Tableau, and messenger tool Slack. To me, Agentforce have to be an easy cross-selling opportunity to Salesforce’s existing customer base, and the company has a novel likelihood to emerge as a strong pillar supporting digital solutions.

Is Salesforce stock a buy instantly?

Directly, Salesforce shares trade at a forward price-to-earnings (P/E) multiple of 28.5. This is usually a healthy premium as compared with the S&P 500‘s forward P/E of twenty-two.9.

CRM PE Ratio (Forward) data by YCharts.

Although Salesforce may be valued as a superior investment as compared with the broader market, the company is trading at a discount to the overwhelming majority of its technology industry counterparts throughout the DJIA.

I feel Agentforce goes to be a big tailwind for Salesforce so long as the AI narrative holds up. Investors will probably need to be searching over the next yr to see how the adoption of Agentforce is progressing and what kind of growth it’s driving for Salesforce.

If Microsoft CoPilot serves as any proxy, I feel quite a bit higher days are ahead for Salesforce, and I expect to see the stock soaring over the next yr.