Analyst says big shift in AI coming in 2025 is huge tailwind for two stocks
Silin Chen
5 min read
If you missed the big surge on Nvidia this year, don’t get too upset yet.
The artificial intelligence narrative is far from over — 2025 could mark a new chapter as the spotlight shifts from hardware titans like Nvidia (NVDA) to software disruptors.
While Nvidia fueled the AI engines with its chips, software giants are poised to steer those engines, empowering enterprises to use these data effectively.
“Now the time has come for the broader software space to get in on the AI Party as we believe the use cases are exploding,” Wedbush analysts led by Daniel Ives wrote in a Dec. 26 report, “enterprise consumption phase is ahead of us beginning in 2025.”
The monetization of AI will possibly bring another growth story.
"Launch of LLM [large language] models across the board, and the true adoption of generative AI will be a major catalyst for the software sector and key players to benefit from this once in a generation 4th Industrial Revolution set to benefit the tech space," Wedbush wrote.
What companies could benefit most from this big shift? Palantir (PLTR) and Salesforce (CRM) , according to Ives.
Palantir joined the Nasdaq 100 Index on Dec. 23, and it is now one of the top performers among the index's components this year.Bloomberg/Getty Images
Palantir is “theMessi of AI”
Palantir Technologies is a market darling in artificial intelligence and data analytics. Its stock price has quadrupled year-to-date.
The surge in Palantir's shares is being driven by the company’s expanding role in AI and increased demand for the technology and its applications.
Palantir's solutions allow governments and enterprises to spot patterns and discover key insights in large datasets quickly and securely.
Palantir's largest client is the U.S. government. It also makes money from large companies, such as European giant Airbus (EADSY) , which produces jets, and German healthcare giant Merck KGaA.
There's plenty of government business to be had, but enterprises are expected to be the primary catalyst behind IT spending in 2025, Wedbush noted.
"Palantir has been a major focus during the AI Revolution with expanding use cases for its marquee products leading to a larger partner ecosystem with rapidly rising demand across the landscape for enterprise-scale and enterprise-ready generative AI," Wedbush said.
"This will be a major growth driver for the US Commercial business over the next 12 to 18 months as more enterprises head down the AI path with Palantir," the firm added, “Palantir has a credible path to morph into the next Oracle over the coming decade with AIP leading the way as many on the Street continue to be huge skeptics of the Messi of AI.”
Palantir joined the Nasdaq-100 Index on Dec. 23 and is now one of the top performers among the index's components this year.
In November, the company posted quarterly results and guidance well above Wall Street expectations. Earnings per share of 10 cents topped the 9 cents that Wall Street expected. Revenue of $726 million also surpassed the $701 million consensus estimate, up 30% from a year ago.
“We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down,” CEO Alex Karp said in the earnings release.
“Our business growth is accelerating, and financial performance is exceeding expectations,” he added.
Wedbush has an outperform rating and a target price of $75 on Palantir. The stock closed at $79.08, down 3.7%, on Dec. 27.
Despite Palantir's promising growth trajectory, its high valuation has raised red flags among some analysts.
In December, UBS and Baird initiated stock coverage with neutral ratings, highlighting valuation concerns as a significant 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 2nd winner in the AI boom
With the AI Revolution entering the software phase, Salesforce is well positioned to capture its share of market expansion, a $7 trillion digital labor market opportunity, Wedbush noted.
Salesforce uses AI agents to help businesses connect with customers.
On Dec.17, Salesforce unveiled Agentforce 2.0, its latest digital labor platform that "makes autonomous AI part of every team, empowering every employee to collaborate with Agentforce in Slack. "
Agentforce's clients include IBM (IBM) , Finnair, Accenture (ACN) , and Heathrow Airport. They are using the platform to augment their teams, streamline operations, and unlock new growth opportunities.
"Agentforce 2.0 is looking to enable AI to perform advanced actions for humans with elevated trust layers built in for agents, paving the way for a new era of digital labor," Wedbush commented.
Salesforce reported fiscal third-quarter results on Dec. 3. Revenue exceeded expectations, but earnings 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, surpassing the $9.34 billion forecast.
The company also raised the low end of its fiscal 2025 revenue guidance, now expecting $37.8 billion to $38 billion. Salesforce's stock price surged 11% on the following trading day.
Chief Executive Marc Benioff highlighted Salesforce’s momentum in artificial intelligence, particularly the Agentforce platform.
“This is a bold leap in the future of work, where AI agents let humans unite to transform all of our customer interactions,” Benioff said.
Wedbush is positive about Salesforce stock into 2025.
"We believe CRM is a clear 2nd derivative beneficiary of 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 firm has a price target of $425 and an outperform rating on Salesforce stock, which closed at $338.45 on Dec.27. The shares are up 28.6% on the year.
