This AI Software Stock is Now a Strong Buy, Says Wall Street

Outside of the diversified “Magnificent Seven” tech giants, software stocks have largely been left out of the artificial intelligence (AI) rally so far. Thanks to shifting enterprise IT budgets, many software names have underperformed - including Salesforce (CRM), which has struggled significantly in 2024 after spending most of 2023 as the top performer on the Dow Jones Industrial Average ($DOWI).

However, now that CRM has finally established a convincing foothold in positive YTD territory - and won a consensus “Strong Buy" rating on Wall Street, too - is it time to scoop up the shares of this AI software stock? Here's what analysts are anticipating.

About Salesforce Stock

Valued at $275 billion, Salesforce Inc. (CRM) is a cloud computing company that provides a platform for customers and developers to build and run business applications, leveraging the cloud, mobile, social, Internet of Things (IoT), and AI. As the leading provider of customer relationship management (CRM) software, Salesforce offers its services to companies across various sectors and industries, with its operations split between Subscription & Support and Professional Services & Other.

Based out of San Francisco, CRM operates internationally, with top clients including names like FedEx (FDX), BP (BP), Siemens (SIEGY), and Bombardier (BDRBF).

CRM stock has been volatile in 2024. The stock gapped sharply lower after poorly received guidance in late May, and spent most of the second and third quarter slowly filling in that bear gap near $270 - a task complicated by resistance from its year-to-date breakeven point, around $263 - before finally breaking out to the upside in the past couple of weeks.

CRM is now up 10.9% for 2024, extending its 52-week gain to 40.7%. Notably, the stock appears to be slightly overbought around current levels, indicating a short-term pullback is possible.

Salesforce also pays a quarterly dividend of $0.40, which yields 0.56% at current levels. During Q2, CRM paid out nearly $400 million in dividends, along with carrying out $4.3 billion in share repurchases.

Salesforce Reports Mixed Results

After the stock's 19.7% haircut in a single session following its May earnings report, CRM's muted 0.7% decline on Aug. 29 after its second-quarter earnings was likely welcome news for investors.

In fiscal Q2 of 2025, Salesforce reported revenue of $9.33 billion, up 8.4% year over year to beat analysts' $9.23 billion estimate. Earnings per share (EPS) rose to $2.56, surpassing Wall Street’s $2.36 per share consensus. Billings for the quarter totaled $8.49 billion, up 9.9% and coming in stronger than expected.

Gross margin of 76.8% was an improvement from last year’s 75.4%, with a free cash flow margin of 8.1%, in line with the year-ago period. Free cash flow rose 20% to $755 million in Q2.

Extolling the virtues of AI-powered data on his company's platform, founder and CEO Marc Benioff said, “We're like a Waymo for your customer information and for automating your company, that is, it's autonomous. It's going to get you to where you need to get to.”

Management guided for Q3 revenue of $9.31 billion to $9.36 billion, with full-year revenue expectations reaffirmed at a midpoint of $37.85 billion and earnings between $10.03 to $10.11 per share.

Alongside the quarterly results, the company also announced the departure of 11-year veteran CFO Amy Weaver. Weaver will step down upon the appointment of her successor, who has not yet been named.

Salesforce is a Top Stock Pick

Analysts have grown quite bullish on CRM stock, which now has a consensus “Strong Buy” rating - up from “Moderate Buy” a month ago. Out of 42 analysts in coverage, 30 now give Salesforce their highest rating.

After the company's recent Dreamforce event, Baird analyst Rob Oliver reaffirmed his “Outperform” rating on CRM, and named the software giant his top large-cap stock idea.

"Checks and confidence in the Data Cloud strategy have improved after Dreamforce, and we believe the existential challenge from GenAI has diminished, if not fully disappeared," wrote Oliver, who also raised his price target on CRM to $340.

The mean price target for CRM is $310.26, about 6.4% higher than current prices, while Baird's new price target implies an expected premium of 16.6%.

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On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.