Prediction: This Will Be the Best Stock in the Dow Jones Next Year

The "Magnificent Seven" is simply a moniker utilized to collectively picture a market-moving clump of immoderate of the world's largest exertion enterprises: Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms, and Tesla. Each is putting its ain stamp connected the artificial quality (AI) landscape, and each person received a batch of attraction from media outlets and investors alike.

But different AI banal that gets little property has handily outperformed 5 of the Magnificent Seven implicit the past 2 years. Enterprise bundle person and Dow Jones Industrial Average (DJIA) constituent Salesforce (CRM 0.03%) has gained a whopping 98% successful conscionable 2 years.

Even with that awesome run-up down it, I deliberation Salesforce's adjacent maturation signifier is conscionable beginning. In fact, fixed the lucrative accidental the institution has successful AI, I deliberation Salesforce could beryllium the top-performing banal successful the Dow adjacent year.

What astir the remainder of the Dow Jones?

Asserting that Salesforce could beryllium the apical performer successful the Dow adjacent twelvemonth is simply a bold claim. After all, what astir the different 29 companies?

The Dow is simply a curated scale that includes immoderate of the world's largest companies crossed astir large manufacture sectors. In my opinion, some fiscal services and user goods stocks inactive transportation immoderate risk. Specifically, I spot some of these industries arsenic peculiarly susceptible to macroeconomic forces including ostentation and involvement rates. While ostentation has been cooling for rather immoderate clip and the Federal Reserve has instituted an involvement complaint tapering protocol, I bash not deliberation the broader system is rather retired of the woods conscionable yet.

Moreover, I deliberation vigor stocks are going to acquisition excessive volatility for the clip being. Broadly speaking, vigor policies thin to disagree betwixt which parties are successful power of Congress. Even aft the results of the 2024 predetermination shingle retired adjacent month, I could easy spot vigor stocks moving beauteous dramatically depending connected immoderate argumentation changes that could spell into effect.

This leaves the exertion sector, wherever the DJIA includes large tech players including Amazon, Apple, Cisco, IBM, Intel, and Microsoft. While I'm bullish connected Amazon and Microsoft, I deliberation some companies are facing a batch of unit and scrutiny to thrust accordant awesome results, considering that they person some poured billions into their AI initiatives.

Meanwhile, Apple's AI roadmap is successful its aboriginal stages -- making it hard to foretell however its decisions volition cookware out. Unfortunately, I deliberation Intel's champion days whitethorn beryllium down it. And IBM and Cisco are stuck competing successful saturated markets. For each of these reasons, I deliberation Salesforce has the astir upside compared to its peers.

A immense accidental for Salesforce

If you've been paying attraction to artificial quality narratives implicit the past mates of years, you've heard the word "generative AI" advertisement nauseam. But what does it really mean?

In elemental terms, generative AI is bundle that has the capableness to digest datasets to assistance reply analyzable questions highly quickly. When generative AI tools are astatine their best, employees crossed a company's workforce are moving blase queries and creating robust data-driven dashboards -- starring to enhanced productivity and efficiency. No much spinning your wheels and burning the midnight oil.

One of the starring types of applications successful generative AI close present is the virtual agent. Microsoft has been a large victor successful this respect acknowledgment to its CoPilot assistant, which runs connected ChatGPT and has been integrated passim the company's ecosystem, spanning unreality computing, productivity tools, and bundle development.

Salesforce has taken enactment of Microsoft's occurrence and decided to situation its large tech cohort. Enter Agentforce, a virtual adjunct that tin assistance customers with things specified arsenic scheduling appointments, billing resolutions, cybersecurity menace analysis, and a big of different usage cases. Salesforce's imaginativeness is to region the friction of human-led lawsuit work and let AI-powered agents to resoluteness customers' needs.

Salesforce already has a heavy penetration among large-scale corporations and small and midsize enterprises acknowledgment to its lawsuit narration absorption (CRM) platform, information analytics tools powered by Tableau, and messenger instrumentality Slack. To me, Agentforce should beryllium an casual cross-selling accidental to Salesforce's existing lawsuit base, and the institution has a unsocial accidental to look arsenic a beardown pillar supporting integer solutions.

Is Salesforce banal a bargain close now?

Right now, Salesforce shares commercialized astatine a forward price-to-earnings (P/E) aggregate of 28.5. This is simply a steadfast premium compared to the S&P 500's guardant P/E of 22.9.

CRM PE Ratio (Forward) information by YCharts.

Although Salesforce whitethorn beryllium valued arsenic a superior concern compared to the broader market, the institution is trading astatine a discount to the bulk of its exertion manufacture counterparts successful the DJIA.

I deliberation Agentforce is going to beryllium a large tailwind for Salesforce truthful agelong arsenic the AI communicative holds up. Investors whitethorn privation to beryllium connected the lookout implicit the adjacent twelvemonth to spot however the adoption of Agentforce is progressing and what benignant of maturation it's driving for Salesforce.

If Microsoft CoPilot serves arsenic immoderate proxy, I deliberation overmuch amended days are up for Salesforce, and I expect to spot the banal soaring implicit the adjacent year.