The “Magnificent Seven” is a moniker used to collectively describe a market-moving cluster of 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 loads 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 only 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 corporate has in AI, I feel Salesforce could possibly be the top-performing stock within the Dow next yr.

What in regards to the remainder of the Dow Jones?

Asserting that Salesforce could possibly be the highest performer within the Dow next yr is a daring claim. In spite of everything, what in regards to the other 29 firms?

The Dow is a curated index that features a few of the world’s largest firms across most major industry sectors. In my view, 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 a while and the Federal Reserve has instituted an rate of interest tapering protocol, I don’t think the broader economy is kind of out of the woods just yet.

Furthermore, I feel energy stocks are going to experience excessive volatility in the meanwhile. Broadly speaking, energy policies are likely to differ between which parties are in command of 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 would 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 loads 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 could also be behind it. And IBM and Cisco are stuck competing in saturated markets. For all of those reasons, I feel Salesforce has probably the most upside in comparison with its peers.

An enormous opportunity for Salesforce

If you happen to’ve been taking note of artificial intelligence narratives during 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 assist answer complicated questions extremely quickly. When generative AI tools are at their best, employees across an organization’s workforce are running sophisticated queries and creating robust data-driven dashboards — resulting in enhanced productivity and efficiency. No more spinning your wheels and burning the midnight oil.

Certainly one of the leading sorts of applications in generative AI right away is the virtual agent. Microsoft has been an enormous winner on this regard due to its CoPilot assistant, which runs on ChatGPT and has been integrated throughout the corporate’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 will help customers with things equivalent 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 due to its customer relationship management (CRM) platform, data analytics tools powered by Tableau, and messenger tool Slack. To me, Agentforce must be a simple cross-selling opportunity to Salesforce’s existing customer base, and the corporate has a novel likelihood to emerge as a powerful pillar supporting digital solutions.

Is Salesforce stock a buy right away?

At once, Salesforce shares trade at a forward price-to-earnings (P/E) multiple of 28.5. This can be a healthy premium in comparison with the S&P 500‘s forward P/E of twenty-two.9.

CRM PE Ratio (Forward) data by YCharts.

Although Salesforce could also be valued as a superior investment in comparison with the broader market, the corporate is trading at a reduction to the vast majority of its technology industry counterparts within the DJIA.

I feel Agentforce goes to be a significant tailwind for Salesforce as long as the AI narrative holds up. Investors will probably want to be looking out over the subsequent yr to see how the adoption of Agentforce is progressing and what sort of growth it’s driving for Salesforce.

If Microsoft CoPilot serves as any proxy, I feel a lot better days are ahead for Salesforce, and I expect to see the stock soaring over the subsequent yr.