This Tech Stock Could Dominate the Market for Agentic AI. Here's Why.
2025 is shaping up to be the year of artificial intelligence (AI) software. Over the last two years, the AI boom has focused on semiconductor stocks like Nvidia, but after building out data centers to perform generative AI computing scale, software companies now seem next up to capitalize on the new tech boom.
Tech analyst Dan Ives of Wedbush recently said, “The time has come for the broader software space to get in on the AI Party as we believe the use cases are exploding.”
Agentic AI is rapidly becoming a buzzword in the industry as using AI via autonomous agents seems to be one of the most immediate applications of generative AI beyond chatbots. Through agentic AI, AI technology can autonomously solve difficult problems using sophisticated reasoning and multistep planning.
Companies are rapidly building their agentic AI tools, but one that looks poised to be a leader in the new technology is Salesforce‘s (CRM -1.39%) Agentforce.
Image source: Getty Images.
What Salesforce is doing with agentic AI
Salesforce is one of the oldest pure-play cloud software stocks, and it’s long led the market for customer relationship management (CRM) software, so the company figures to be a favorite in Agentic AI.
Like Nvidia and other AI leaders, Salesforce is building on years of work and data with its new AI product, Agentforce. The company introduced Agentforce at its Dreamforce conference in September.
Agentforce allows users to build and customize autonomous AI agents that can serve employees and customers 24/7. Salesforce says that Agentforce resolves 83% of visitor requests on its help site, and its usage spans Salesforce’s product suite from CRM to Slack to Tableau.
Those touchpoints and Salesforce’s 25-year history give it deeper customer relationships than most of its competitors, and CEO Marc Benioff explained on the company’s recent earnings call that agentic AI and Agentforce have significantly expanded the company’s total addressable market (TAM), saying, “We’ve really created a whole new market, a new TAM, a TAM that is so much bigger and so much more exciting than the data management market, it’s hard to get our head completely around.”
Salesforce has already signed 200 deals with Agentforce, and Benioff described the pipeline as “incredible.”
Part of the reason stocks have soared on AI is that the technology has the power to greatly scale productivity, and Agentforce is one of the first tools to tap into that. Benioff said, “This is really a moment where productivity is no longer tied to workforce growth, but through this intelligent technology that can be scaled without limits.”
What it means for Salesforce
Salesforce’s revenue growth rate has slowed substantially from pre-pandemic levels, coming in at just 8.3% in the third quarter, and there isn’t evidence yet in its forecast that Agentforce is moving the needle.
For the fourth quarter, the company guided for 7% to 9% revenue growth, and for remaining performance obligations (RPO) growth of 9%, referring to the growth of its backlog over the next year.
It will likely take a few more quarters for Agentforce and Agentic AI to begin to impact the company’s growth as it just launched the product in September.
A product like Agentforce also has the potential to deliver high-margin profits for Salesforce as the product, like software generally, is highly scalable and the marginal cost of delivering it for additional customers is essentially zero. Once the intellectual property is created, the costs are primarily associated with the cloud computing power necessary to run it. The research and development necessary to create the product has already been done, though Salesforce is likely to improve on it, meaning that the incremental revenue from Agentforce should be mostly profit.
That helps explain why cloud infrastructure companies have been willing to spend tens of billions of dollars on Nvidia components to build out AI infrastructure. The potential of software programs like Agentforce is massive as it’s a huge value-add and productivity improvement that Salesforce’s customers are likely to pay up for.
It’s unclear how much Agentforce will expand Salesforce’s TAM and drive its growth, but investors should heed Benioff’s words above. The new technology is likely to be a game changer for Salesforce.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Salesforce. The Motley Fool has a disclosure policy.