Salesforce Upgraded to Outperform by Northland Capital Markets

Salesforce has received an upgrade to an Outperform rating from Northland Capital Markets following the launch of Agentforce, a new platform featuring Agentic AI technology.

According to Northland Capital Markets, Agentforce has not only matched Microsoft’s advancements in AI but may have surpassed them in this area. Officially introduced on September 12th, the Agentforce platform allows the integration of GenAI agents into various workflows related to sales, service, marketing, and commerce.

The platform utilizes the Atlas reasoning engine along with the xLAM series of Large Action Models, claiming to eliminate the need for code when creating agents. Moreover, its ability to transition to human agents when dealing with complex or ambiguous scenarios represents a major advancement in autonomous agent technology, enhancing relevance and accuracy.

Northland Capital Markets also noted that Salesforce’s pricing strategy for Agentforce, which averages about $2 per conversation, aims to reflect the value of GenAI technology for customers. This is anticipated to significantly expand the total addressable market (TAM) for the software, increasing it from $0.8 trillion to $3.2 trillion—a fourfold rise.

The firm believes that Salesforce is well positioned to benefit from the expected fourfold expansion in software TAM driven by GenAI. They have also extended their discounted cash flow projections from eight years to thirteen, indicating confidence that Salesforce is no longer limited by average revenue per user.

In light of these developments, Northland Capital Markets has raised its 12-month price target for Salesforce from $270 to $400. With the potential of Agentic AI and the advancements in GenAI, the firm is optimistic about the company’s future. The unique aspects of Agentforce and its alignment with the rapidly evolving landscape of AI technology have established Salesforce as a formidable player in the market, potentially outpacing competitors and significantly increasing its growth in the software TAM.