In the emerging AI software battle between Microsoft and Salesforce , investors do not need to pick a side. Jim Cramer says own both. The news Deutsche Bank on Friday raised its price target on Salesforce to $365 a share from $325, implying nearly 9% upside from Thursday’s close. Analysts cited the software maker’s new suite of artificial intelligence tools, dubbed Agentforce, as a catalyst for additional stock gains. “Our industry conversations suggest bullishness around Agentforce and how it is driving renewed interest in the core Salesforce portfolio,” the analysts said in a note ahead of Salesforce’s Dec. 3 earnings report. With Agentforce, customers can create AI agents that are capable of taking action and completing tasks without supervision — for example, updating a shipping address on an order after it was already placed. While Deutsche Bank said its industry checks indicate Salesforce inked an Agentforce deal in the mid-seven figures, analysts still had a word of caution for clients. Investors should not “get too far ahead of the opportunity as it remains very early days” for Agentforce, they wrote. After all, Salesforce didn’t roll out Agentforce for general availability until Oct. 25. Shares of Salesforce are up 1.5% Friday, extending a more-than-30% rally that began in mid-September when the company detailed Agentforce at its influential annual conference. The stock on Friday afternoon traded within a dollar of its all-time closing high of $341.73, set on Nov. 11. CRM YTD mountain Salesforce (CRM) year-to-date performance Big picture Agentforce is the company’s second attempt to capitalize on the generative AI boom that began two years ago with the launch of ChatGPT. Its first initiative, which carried the Einstein Copilot branding, largely failed to move the needle. The reception to Agentforce on Wall Street has been quite positive. With its second foray, Salesforce is now among the companies competing in the world of AI agents, which are generally seen as the next frontier beyond generative AI chatbots that excel at providing written answers or creating images in response to user queries. Salesforce’s competition on that frontier heated up in a big way this week when fellow Club holding Microsoft rolled out a host of AI agent tools at Ignite, its annual developers conference. The announcements came roughly one year after the tech giant launched a suite of AI assistant tools called Microsoft 365 Copilot. Both companies leaning into AI agents is notable because Salesforce CEO Marc Benioff has not been hesitant to attack Microsoft’s competing AI offerings. During the company’s earnings call back in August, for example, Benioff said Microsoft has “disappointed so many customers with AI.” In October, Benioff took to social media to criticize the company’s AI roadmap again , arguing that he’s “yet to find anyone who’s had a transformational experience with Microsoft Copilot.” He described Copilot as “more like Clippy 2.0,” a reference to Microsoft’s virtual assistant that debuted in 1996. Microsoft CEO Satya Nadella has not responded directly to Benioff’s shots. However, in an interview with CNBC Tuesday, Nadella touted Copilot as the “fastest-selling adopted suite of Microsoft 365 ever in our history. He added, “You know, 70-plus percent of the Fortune 500 have deployed it. They’re coming back for more suites, so we are excited about this next phase.” Salesforce stock is up 28% year to date versus Microsoft’s roughly 9% gain since the start of 2024. Bottom line It’s no surprise to us that Wall Street has recognized the significant potential of Agentforce. We’ve been touting its promise for months. In recent years, Salesforce relied on a slew of huge acquisitions to boost topline growth, such as buying Slack in 2021 and Mulesoft in 2018. If Agentforce proves successful in the long term, it would be an encouraging win for the firm’s in-house innovation initiatives — and a reason to stay invested in the stock. Nevertheless, Benioff’s criticism Microsoft are overblown, even if we acknowledge the mixed reception to Copilot. “Right now, it does not seem to be attracting [a lot]. It came out hot,” Jim said Friday. “And now it’s not hot.” Still, it’s not too late for Microsoft to improve its competitive standing — indeed, it is now very early innings for its own AI agent tools. “The great thing about Microsoft is they pivot. It can get better. I don’t want to go against Microsoft,” Jim said. “They have a lot of smart people there.” (Jim Cramer’s Charitable Trust is long CRM, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Salesforce CEO Marc Benioff speaks during Salesforce’s Dreamforce on September 17, 2024 in San Francisco, California.
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In the emerging AI software battle between Microsoft and Salesforce, investors do not need to pick a side.