If you missed Nvidia's big boost this year, don't get too upset just yet.
The ai narrative is far from over: 2025 could mark a new chapter as the spotlight shifts away from hardware titans like Nvidia. (NVDA) to software disruptors.
While Nvidia drove the engines of ai with its chips, software giants are poised to drive those engines, allowing companies to use this data effectively.
“Now is the time for the broader software space to join the ai Party, as we believe use cases are exploding,” Wedbush analysts led by Daniel Ives wrote in a Sept. 26 report. December, “the business consumption phase is ahead of us.” from 2025.”
ai monetization will likely bring another growth story.
“The launch of LLM (large language) models across the board and the true adoption of generative ai will be a major catalyst for the software industry and key players to benefit from this once-in-a-generation fourth industrial revolution that will benefit the tech space,” Wedbush wrote.
Which companies could benefit most from this big change? Palantir (PLT) and sales force (CRM) according to Ives.
Palantir is “the Messi of ai”
Palantir Technologies is a market favorite in artificial intelligence and data analytics. Its share price has quadrupled so far this year.
Palantir's stock rise is being driven by the company's growing role in ai and increased demand for the technology and its applications.
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Palantir solutions enable governments and businesses to detect patterns and discover key insights in large data sets quickly and securely.
Palantir's largest customer is the United States government. It also makes money with large companies, such as the European giant Airbus. (EASY) which produces aircraft, and the German healthcare giant Merck KGaA.
There is a lot of government business to be done, but enterprises are expected to be the main catalyst behind IT spending in 2025, Wedbush noted.
“Palantir has been a major focus during the ai revolution with expanding use cases for its flagship products that have led to a larger partner ecosystem with rapidly increasing demand across the enterprise-scale generative ai landscape and ready for business,” Wedbush said.
“This will be a major growth driver for the US commercial business over the next 12 to 18 months as more companies follow the ai path with Palantir,” the firm added, “Palantir has a credible path to become the next Oracle in the future. next decade with AIP at the helm, since many on the street are still very skeptical about the Messi of ai.”
Palantir joined the Nasdaq-100 index on December 23 and is now one of the best performers among the index's constituents this year.
In November, the company released quarterly results and guidance well above Wall Street expectations. Earnings per share of 10 cents beat the 9 cents Wall Street had expected. Revenue of $726 million also topped the consensus estimate of $701 million, up 30% from a year ago.
“We absolutely gutted this quarter, driven by relentless demand for ai that will not slow down,” CEO Alex Karp said in the earnings release.
“Our business growth is accelerating and financial performance is exceeding expectations,” he added.
Related: Analysts Sound Alarms About Palantir Stock Through 2025
Wedbush has an Outperform rating and a $75 price target on Palantir. The stock closed at $79.08, down 3.7%, on December 27.
Despite Palantir's promising growth trajectory, its high valuation has raised red flags among some analysts.
In December, UBS and Baird initiated coverage of stocks with neutral ratings, highlighting valuation concerns as a major factor in their cautious stance.
The stock's forward price/earnings ratio is 163. The forward P/E for the Standard & Poor's 500 index is about 24.
Salesforce: a clear second winner in the ai boom
With the ai revolution entering the software phase, Salesforce is well positioned to capture its share of the market expansion, a $7 trillion digital labor market opportunity, Wedbush noted.
Salesforce uses ai agents to help businesses connect with customers.
On December 17, Salesforce introduced Agentforce 2.0, its latest digital workplace platform that “makes autonomous ai part of every team, allowing every employee to collaborate with Agentforce in Slack.”
Agentforce clients include IBM (IBM) Finnair, Accenture (ACN) and Heathrow airport. They are using the platform to grow their teams, optimize operations and unlock new growth opportunities.
“Agentforce 2.0 seeks to enable ai to perform advanced actions for humans with elevated levels of trust built in for agents, paving the way for a new era of digital work,” Wedbush said.
Salesforce reported fiscal third-quarter results on December 3. Revenue beat expectations, but profits fell slightly short.
Adjusted earnings per share were $2.41, just below Wall Street's estimate of $2.44. Revenue rose 8% year over year to $9.44 billion, exceeding the $9.34 billion forecast.
The company also raised the lower end of its fiscal 2025 revenue guidance, now expecting between $37.8 billion and $38 billion. Salesforce's stock price rose 11% the following trading day.
CEO Marc Benioff highlighted Salesforce's push into artificial intelligence, particularly the Agentforce platform.
More ai actions:
- Top Analyst Revises Micron Stock Price Target Ahead of Q1 Earnings
- Analysts renew Ciena stock price target after ai outlook
- Cathie Wood Buys $30 Million in Under-the-radar ai stocks
“This is a bold leap into the future of work, where ai agents allow humans to join forces to transform all of our customer interactions,” Benioff said.
Wedbush is bullish on Salesforce stock through 2025.
“We believe CRM is a clear second beneficiary from the ai revolution that could add ~$80 per share to the CRM story as this monetization story takes shape over the next 12 to 18 months,” Wedbush said.
The company has a $425 price target and an Outperform rating on Salesforce shares, which closed at $338.45 on December 27. Shares are up 28.6% year over year.
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