Prediction: 1 Incredible Artificial Intelligence (AI) Software Stock That Will Join the $1 Trillion Club by 2035 (Hint: Not Palantir)

Salesforce is strategically leveraging generative AI, particularly its Agentforce platform, to drive significant growth and aims for a $1 trillion valuation by 2035. The company projects a 10% compound annual growth rate, targeting $60 billion in revenue by fiscal 2030, alongside an improved operating margin nearing 40% and achieving the 'Rule of 50' through AI-driven productivity and workforce adjustments. With Data Cloud and AI recurring revenue already up 120% year-over-year, and Agentforce contributing $440 million (up 400% YoY), management anticipates substantial revenue acceleration and potential multiple expansion from its currently attractive valuation, positioning it as a compelling long-term investment relative to peers like Palantir.

Analysis

Salesforce (CRM) is strategically leveraging generative AI, particularly its Agentforce platform, to drive significant revenue acceleration and margin expansion. The company reported a 120% year-over-year increase in Data Cloud and AI recurring revenue, reaching $1.2 billion, with Agentforce alone contributing $440 million, up 400% year-over-year. Management projects a 10% compound annual growth rate over the next five years, targeting over $60 billion in revenue by fiscal 2030.

This growth is expected to be coupled with improved operating efficiency, as Salesforce aims for a "Rule of 50" by 2030, implying operating margins near 40% from 34% today. AI-driven productivity improvements have already led to workforce rebalancing, cutting 4,000 customer service jobs while hiring new salespeople, which should enhance sales and operating leverage. The company's current valuation, trading at 16.3x adjusted EBITDA and 24x adjusted earnings, appears attractive compared to its growth prospects and Palantir's (PLTR) 340x adjusted EPS.

Salesforce aims for a $1 trillion valuation by 2035, driven by projected operating income of $24 billion by fiscal 2030 and potentially $42.5 billion by 2035. This trajectory relies on sustained double-digit operating income growth and potential multiple expansion as investor confidence increases. Increased share repurchases from growing free cash flows are also expected to support higher earnings-per-share growth and valuation multiples.

Key Decisions for Investors

• Investors should consider Salesforce (CRM) as a compelling long-term growth investment, driven by its robust generative AI strategy and ambitious financial targets.
• Monitor the execution of its Agentforce platform and its impact on revenue acceleration and operating margins, as well as the company's progress towards its "Rule of 50" goal.
• Evaluate the potential for multiple expansion, supported by projected operating income growth and increased share repurchases, as the company aims for a $1 trillion valuation by 2035.