Coming out of the holiday weekend, customer relationship management software kingpin Salesforce (NYSE:CRM) gained fractionally in Monday morning’s trading session as new word emerged about a deal between itself and Amazon (NASDAQ:AMZN), or rather, Amazon Web Services (AWS). That deal gave investors just a little extra hope as software stocks come under fire from a growing concern that users may wait for upgrades or to even make purchases at all.
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The new deal calls for Salesforce to offer up several of its products on AWS Marketplace while also allowing Salesforce to offer support for Amazon Bedrock. Amazon Bedrock is a managed service that offers access to at least some artificial intelligence applications through a standard application programming interface (API). That, in turn, will allow for more development of AI-driven apps in Salesforce, as well as more AI-driven workflows. Plus, Salesforce will also ramp up Salesforce Data Cloud to give more AWS technologies access to data sharing.
CRM is Still a Laggard in the Field
One of the big concerns to come out of this business cycle, at least for software companies, was the idea that businesses seeking to better house their cash against a potential downturn might elect to hold off on upgrades or even renewals. While some companies—particularly cybersecurity stocks—managed to shrug off the worst of the impact, those like Salesforce found themselves in a bad position. Now, with third-quarter earnings reports coming soon for Salesforce, some analysts are expecting at least some decline in sales as businesses keep their wallets a little closer than previously seen. It’s far from alone here, but in the short term, it’s likely to weigh on earnings and revenue.
Is Salesforce a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CRM stock based on 25 Buys, 12 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 46.52% rally in its share price over the past year, the average CRM price target of $252.12 per share implies 11.99% upside potential.
