CRM Stock to Gain Further on AI-Backed Cloud
Today’s stock represents another of my favorite investing methods, which is to gain from market-leading companies riding the top technology trends. One of the top trends today is the shift toward the cloud.
With the move toward connectivity happening across a plethora of devices and platforms, there are companies helping their clients enhance their businesses by making the most of their customer relationships. This is a very lucrative and competitive segment of the market, and one company is charging full steam ahead, promising to make great returns for its investors.
Case in point: salesforce.com, inc. (NYSE:CRM). It is a leading provider of enterprise software, which it delivers through the cloud, with a focus on customer relationship management (CRM). Salesforce helps its clients connect with their customers in totally new ways through cloud, social media, mobile, Internet of Things (IoT), and artificial intelligence (AI) technologies.
With a community of more than 150,000 customers and strategic relationships with nearly 400 Fortune 500 companies, Salesforce is helping them in this digital transformation.
Salesforce is the leading CRM company, and its popular “Customer Success Platform” has become one of the world’s most successful enterprise cloud ecosystems. With that platform, companies of all sizes can connect to their customers using the latest innovations in cloud, social, mobile, and data science technologies.
As per research by International Data Corporation (IDC), worldwide spending on public cloud services and infrastructure is expected to reach $122.5 billion in 2017, which is an increase of 24.4% over 2016. (Source: “Worldwide Public Cloud Services Spending Forecast to Reach $122.5 Billion in 2017, According to IDC,” IDC, February 20, 2017.)
In the 2015–2020 forecast period, overall public cloud spending will experience a 21.5% compound annual growth rate (CAGR), which is almost seven times the rate of overall IT spending growth. IDC forecasts that, by 2020, public cloud spending should be around $203.0 billion worldwide. Software as a service (SaaS) is likely to remain the dominant cloud computing type, capturing nearly 60% of all public cloud spending in 2020.
Salesforce is in a great position to gain from this trend as it continues its mission to move businesses to cloud- and subscription-based services. With the adoption of cloud computing, businesses can accelerate innovation and engage better with their customers.
CRM stock is one of the best plays in this space because the company has been increasing its revenues by double digits. The recent results are additional evidence of the astounding growth that the company has been posting.
The company posted its Q3 earnings last week and posted better-than-expected results driven by the demand for the company’s cloud-based services. Revenue increased 25% year-over-year to $2.68 billion. (Source: “Salesforce Announces Record Third Quarter Revenue, Raises Full Year Fiscal 2018 Revenue Guidance,” salesforce.com, inc., November 21, 2017.)
CEO Marc Benioff said that the company delivered a record third quarter and is on the path to exceed $20.0 billion faster than any enterprise software company in history.
And that’s why management keeps focusing on continuous innovation. With its “Einstein” analytical platform, Salesforce is leading companies into the future. Einstein AI to the world’s top CRM and millions of Salesforce users, across sales, service, marketing, commerce, etc.
The Einstein AI services should further boost the business of the company and push CRM stock higher. Salesforce stock has gained almost 170% returns over the last five years and about 45% in the last year.
The following CRM stock chart shows this impressive rise.
Chart courtesy of StockCharts.com
Salesforce is likely to continue its momentum as the leader in CRM, which is the fastest-growing segment in the industry. Salesforce is making the most of the age of the customer, which is driven by innovation as everyone and everything becomes connected.
With billions of mobile phones and intelligent connected devices, Salesforce enables companies to connect and engage with customers in extraordinary ways.
The company’s focus on innovation and its push into AI with Einstein should continue providing the competitive edge that could translate into CRM stock posting new records. Investors who are convinced about the potential of the cloud and are keen on making money from this trend should not ignore Salesforce stock.