Zacks Investment Ideas feature highlights: Salesforce and Microsoft
For Immediate Release
Chicago, IL – May 23, 2025– Today, Zacks Investment Ideas feature highlights Salesforce CRM and Microsoft MSFT.
Buy This Megacap Tech Stock Down -2% Ahead of Earnings?
Salesforce stock has lagged solidly behind the Tech sector over the past five years. Wall Street is worried about CRM's slowing growth and the possible negative impact artificial intelligence could have on the entire cloud software industry.
The business software powerhouse is fighting back by investing heavily in AI efforts (Agentforce), boosting profitability, and paying dividends. Salesforce's earnings outlook has held up over the last year, and its valuation has improved significantly.
Investors might want to buy Salesforce stock down 20% from its highs heading into its Q1 fiscal 2026 earnings release on Wednesday, May 28.
The Bull Case for Salesforce Stock
Salesforce is a pioneer across business software, customer relationship management, and software-as-a-service.
CRM's growing portfolio supports sales, marketing, commerce, customer and client engagement, analytics, app development, and beyond. Companies big and small rely heavily on Salesforce's offerings that quickly become embedded into their businesses and are critical to day-to-day operations and beyond.
The business software power grew its revenue by an average of roughly 29% for 10 years between 2012 and 2022. Salesforce prolonged its impressive YoY growth through some major acquisitions. But its days of 25% to 30% YoY growth are over—its sales climbed 9% last year (fiscal 2025) and 11% in FY24.
Salesforce's transformation into a more mature growth technology company like Microsoft and others forced it to focus on the bottom line. It has trimmed costs through job cuts and other efficiency efforts to boost its earnings over the long haul.
Salesforce is returning value to shareholders via buybacks. Plus, CRM showcased its transition into a new era by declaring its first-ever dividend in 2024, joining the likes of Meta and Alphabet.
CRM's Artificial Intelligence Push and Growth Outlook
On the AI front, Salesforce launched its Agentforce AI tool in October 2024. Salesforce's new AI-powered platform allows customers to use existing software tools to easily program "agents" for automating tasks like customer service, marketing campaigns, and customer/business procurement and development.
Salesforce said last quarter that it landed 5,000 Agentforce deals since October, including more than 3,000 paid agreements.
CRM boasted that its Data Cloud & AI annual recurring revenue climbed 120% YoY last year (FY25). Digging deeper, Salesforce said "nearly half of the Fortune 100 are both AI & Data Cloud customers," and all of its "top 10 wins in Q4 included Data and AI."
The company highlighted that Agentforce handled 380K conversations, "achieving an 84% resolution rate, with only 2% of the requests requiring human escalation." The goal is to infuse generative AI across its entire product portfolio.
Salesforce's AI push is critical as businesses across the U.S. and beyond race to integrate artificial intelligence into their operations.
Salesforce's earnings outlook has held up since its fourth quarter release, landing it a Zacks Rank #3 (Hold). The tech company's EPS estimates have remained largely unchanged over the past year as well.
CRM is projected to grow its EPS by 9% this year and 11% next year, following 24% growth last year. The company has topped our EPS estimate in 19 out of the past 20 quarters.
CRM is projected to grow its revenue by 8% and 9%, respectively, adding $6.5 billion to the top line between FY25 and FY27.
Time to Buy the Tech Giant on the Dip?
CRM has skyrocketed 5,500% during the past two decades, blowing away MSFT's 1,700% and Tech's 720%.
Salesforce has jumped 280% in the last 10 years, roughly matching the Tech sector's 290%, but falling miles behind Microsoft's 860%.
The more mundane performance is fueled by its 60% gain in the past five years, lagging Tech's 115% and Microsoft's 150%.
CRM stock is down 16% YTD vs. Tech's 2% dip. The recent underperformance provides investors a chance to buy Salesforce stock 25% below its average Zacks price target and 20% below its December record.
The stock recently got rejected by its 200-day moving average. Yet, it remains above its 50-week moving average as it attempts to hold its ground at its 2020 breakout levels, while trading at neutral RSI levels.
Salesforce's improved earnings outlook has it trading at a 75% discount to its 10-year median at 33X forward 12-month earnings and in line with its industry.
CRM's PEG ratio, which factors in its longer-term earnings growth outlook, sits at 2.6, marking an 85% discount to its 10-year highs and only a slight premium to its industry.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Microsoft Corporation (MSFT): Free Stock Analysis Report
Salesforce Inc. (CRM): Free Stock Analysis Report
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
25 minutes ago
- Globe and Mail
Better Energy Stock: TotalEnergies vs. Chevron
For investors, choosing between two similar companies to add to a portfolio can be a challenging process. Chevron (NYSE: CVX) and TotalEnergies (NYSE: TTE) offer a great example of this. Both are integrated energy giants. Both stocks offer high yields. But they have slightly different positive and negative attributes. So which one might be the better fit for your dividend portfolio? What do Chevron and TotalEnergies do? As integrated energy companies, Chevron and TotalEnergies have operations in the upstream segment (oil and natural gas production), the midstream segment (energy transportation), and the downstream segment (chemicals and refining). Each part of the energy industry operates a little differently from the others, and having exposure across all of them helps soften the impacts that volatile commodity prices can have on their results. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Oil and natural gas prices are still the main driver of each company's financial results, and have huge impacts on their stock prices. But compared to pure-play drillers or chemical companies, Chevron and TotalEnergies tend to get through the typical energy cycle more easily. Each of these companies also has material geographic diversification. That said, Chevron is a U.S. company and it tends to have more exposure to its home market. TotalEnergies is a French company and it tends to have more exposure to Europe. Overall, however, the energy businesses are fairly similar. But these two companies are not interchangeable. That is highlighted by the fact that at their current share prices, Chevron's dividend yield is 4.8% and TotalEnergies yield is 6.5%. And the differences matter here. How are Chevron and TotalEnergies different? If you are an income investor, you'll be interested to know that Chevron has increased its dividend annually for 38 consecutive years. That's an impressive record given the inherent volatility of the energy sector. TotalEnergies's track record isn't as impressive, but it has gone through different dividend policies. Like most European companies it was a semi-annual payer before more recently shifting to quarterly payments. And for a stretch it targeted a set percentage of free cash flow, which meant its dividend varied. However, it has paid dividends for decades and more recently has focused on a progressive dividend, meaning it has been steadily increasing its payouts of late. Notably, however, when its European peers BP and Shell cut their dividends in 2020, TotalEnergies maintained its dividend, with management specifically stating that it was aware of the importance of the payment to its shareholders. On dividend reliability, Chevron wins, but TotalEnergies isn't exactly a bad deal. Chevron's balance sheet is among the strongest of its closest peer group, with a debt-to-equity ratio of around 0.2. TotalEnergies' debt-to-equity ratio is 0.5. That's much higher, of course, but TotalEnergies carries more debt and more cash. For example, Chevron ended the first quarter of 2025 with around $4.6 billion in cash on its balance sheet while TotalEnergies had $29 billion. Having less debt is better than having more debt and more cash, but TotalEnergies is still a financially strong company. This point is probably a wash. TotalEnergies is making a public push to use its fossil fuel profits to expand into the electricity space, with a focus on renewable power. This part of the business made up around 10% of its adjusted net operating income in 2024. Chevron is sticking more closely to its core oil and natural gas operations. If you are looking for an energy company that is adjusting today for a future world that relies more on clean energy, TotalEnergies is the easy winner. To be fair, BP and Shell have both discussed doing something similar. But they each used a clean energy shift as the excuse for their 2020 dividend cuts. Then, they both walked back their clean energy plans. TotalEnergies actually made the change and didn't resort to a dividend cut. So it stands out from Chevron, BP, and Shell when it comes to renewable energy. Which one will you pick? Chevron is facing some company-specific issues right now, including an acquisition that isn't going as well as hoped and some geopolitical upheaval around its operations in Venezuela. That's why its yield is so attractive relative to U.S. peer ExxonMobil, which has a yield of just 3.8%. TotalEnergies' dividend yield isn't quite as good as it looks, meanwhile, because U.S. investors have to pay French fees and taxes on it (though some of that can be claimed back come April 15). All in all, there are a lot of positives and negatives to consider with these two high-yield integrated energy giants. My preference is to err on the side of clean energy since the world is clearly in the middle of an energy transition. Add in the lofty yield and management's dividend support during the pandemic, and it's clear that TotalEnergies is a better fit for my portfolio based on my general beliefs about the future of the energy sector and income desires. But there's a strong case to be made for investing in Chevron, too, particularly if you prefer to keep your taxes as simple as possible and if you prize dividend consistency as much as dividend yield. Should you invest $1,000 in Chevron right now? Before you buy stock in Chevron, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chevron wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!* Now, it's worth noting Stock Advisor 's total average return is996% — a market-crushing outperformance compared to174%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
CBC
38 minutes ago
- CBC
Why are there no jobs for Gen Z? Recent grads face worst job market since the 90s
Some young adults are pivoting or adjusting their expectations, with economic and demographic factors making finding entry-level jobs a significant challenge.
Globe and Mail
40 minutes ago
- Globe and Mail
Can Rivian Realistically Return to Growth in 2025?
When many investors turned to find the next Tesla, which is easier said than done, some turned to the young electric vehicle (EV) maker Rivian Automotive (NASDAQ: RIVN). The company had proven capable of manufacturing high-quality vehicles, impressed critics and consumers alike, and inked a massive deal for delivery vans (EDVs) with Amazon -- life was good. Exiting 2023 you could argue Rivian had more momentum than any EV maker out there, but that has since dissipated and left investors wondering if the automaker can return to growth in 2025. The harsh truth The harsh truth is that the automotive industry is extremely competitive, and it takes an automaker with a full lineup to be truly successful. That hampers Rivian's ability to post extreme growth as the company only offers the R1T, R1S, and EDVs. But what's worse is that Rivian's only offerings are aging, and demand for them is waning -- it's been a noticeable trend. So the question facing investors is: Can the automaker return to growth in 2025 before the highly anticipated R2 launch in 2026? Driving demand Investors in the know understand that Rivian has a small consumer base, but that it's a highly passionate base as well. There are Rivian adventure groups all across social media with consumers planning trips among other things. Rivian is attempting to tap into this passion with its first major marketing push, which the company could certainly use to help stoke demand for its vehicles. "This campaign is about celebrating the people who define what Rivian truly is," said Vice President of Marketing Denise Cherry on Rivian's blog. "Our vehicles are made to empower exploration and adventure, but it's the stories our owners create that give them real soul. For our first 360 brand campaign, we wanted to make sure our owners were the spotlight." Rivian has largely relied on word of mouth and organic growth to spread its brand awareness, but with demand waning over the past year, this marks the right time for the company to try to drive interest and demand for its R1 vehicles. The next step Then it'll be time for the R1 vehicles to hand the baton to the R2 in 2026, which starts at roughly $45,000, or about half the price of Rivian's R1 vehicles. With 155,000 production units annually the R2 will be able to nearly double production of the R1S and R1T. If demand is there, expect deliveries to take off and accelerate through 2026. Investors also can't forget Rivian's big-time move to swap initial production of the R2 from its Georgia plant, which is under construction, to its Illinois plant thanks to an expansion of the factory. It's a move that not only fills production capacity at its original plant, but that saved the company roughly $2.25 billion. What it all means The harsh truth is that Rivian is unlikely to return to growth in 2025, unless its marketing campaign works miracles to drive immense demand. The automaker is essentially all-in on its R2, which boasts a much lower-cost bill of materials and improved tech, and will rely on the R2, R3, and R3X to take the company into its next growth stage. The near-term environment for EVs is pessimistic, especially with the current administration pulling support for the EV industry, and Rivian lacks any visible catalysts for the stock in 2025. But investors would be wise to take the long-term approach with Rivian. The company just achieved two consecutive quarters of gross profit and if it executes the production ramp-up of the R2 in 2026, it will be a much better year for investors. Where to invest $1,000 right now When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor's total average return is 996%* — a market-crushing outperformance compared to 174% for the S&P 500. They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor. *Stock Advisor returns as of June 9, 2025
