As Salesforce Inc. (NYSE:CRM) navigates a complex demand landscape, optimism is brewing for the second half of 2024.
JPMorgan analysts spoke to Salesforce partners, consultants and customers, and included feedback in a Wednesday research report.
"The first half was quite tough," remarked a partner from a Salesforce-focused consulting firm. He anticipates an upswing as pressure mounts for increased software spending, especially among retail companies.
Stakeholders are "fed up" with the dual mandate of cutting costs while driving sales, leading to a potential loosening of budget constraints amid fears of falling behind in the AI race.
Shorter-Term, Lower-Cost Projects Are Here To Stay
The trend towards shorter-term, lower-cost software projects is becoming permanent. Firms are breaking larger strategies into manageable pieces that demonstrate immediate ROI.
"I think this may be a new way of buying that is here to stick around," the partner noted, reflecting a significant industry shift.
While he sees Salesforce maintaining 10% or greater growth for the next couple of years, there's an emphasis on the need for innovative products to sustain long-term expansion. "They are king of CRM," the partner added, referring to the company's customer relationship management platform. "But they need more than that at this point."
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Salesforce Data Cloud Gains Momentum
Feedback surrounding Salesforce's Data Cloud is largely positive, with customers implementing it at scale. "I see momentum with Data Cloud in our business... feedback [from customers] is mostly positive," the partner shared, although he acknowledged the complexity of implementations poses challenges.
With a price target set at $310 for Salesforce stock, JPMorgan maintains an 'Overweight' rating.
As Salesforce pivots towards efficiency and profitability, its focus on generative AI capabilities may position it favorably for the future, even amidst current market headwinds.
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