Salesforce (CRM) Just Crushed Earnings - So Why Is This Analyst Still Bearish?

We recently published a list of 10 AI Stocks on Wall Street’s Radar. In this article, we are going to take a look at where Salesforce, Inc. (NYSE:CRM) stands against other AI stocks on Wall Street’s radar.

On May 29, DA Davidson analyst Gil Luria raised the price target on Salesforce, Inc. (NYSE:CRM) to $225.00 (from $200.00) and maintained an “Underperform” rating. Salesforce is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce.

The firm’s rating update follows Salesforce’s recent earnings report, demonstrating better-than-anticipated results. It reported first-quarter revenue of $9.83 billion, up 8% year-over-year and topping the analyst consensus from Visible Alpha. Meanwhile, adjusted net income was $2.5 billion, or $2.58 per share, rising from $2.41 billion, or $2.44 per share, in the year-ago quarter, also beating estimates.

Despite the positive performance, DA Davidson has pointed out concerns about the company’s future growth prospects. The firm noted how Salesforce’s future outlook has been adjusted to account for foreign exchange impacts and a modest first-quarter beat.

It also said that growth in Salesforce’s core cloud segments is slowing. However, it is being partially offset by positive developments in sectors such as data cloud and artificial intelligence. Salesforce’s committed remaining performance obligations (cRPO) growth was also discussed, which was one percentage point higher than anticipated.

Nevertheless, guidance for the second quarter was slightly below expectations, suggesting that the company may experience single-digit constant currency (CC) growth for the first time in its history.

Overall, the firm has increased the price target on the stock, but its underperform rating signifies the firm’s reservations regarding its stock performance relative to the market.

Overall, CRM ranks 3rd on our list of AI stocks on Wall Street’s radar. While we acknowledge the potential of CRM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CRM and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.