RBC Capital Markets Software Equity Analyst Rishi Jaluria and Macquarie Head of US AI and Software Research Frederick Havemeyer join Market Domination to discuss the best AI plays outside major tech companies and chipmakers.

Havemeyer says that cybersecurity companies will benefit from the AI race and points particularly to CrowdStrike (CRWD). "While they're not selling generative AI themselves, we think that the advent of generative AI is making it much easier for attackers to exploit a lot of things," he explains. He says that CrowdStrike is well positioned to defend against those attacks.

Jaluria points to Zoom (ZM) as an "underappreciated AI play," as it uses the technology as a tool to aid salespeople or HR representatives in analyzing behaviors. "I think about those use cases, maybe even verticalizing them for the Contact Center, where Contact Center Zoom has been getting a great amount of success," he explains.

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This post was written by Melanie Riehl

Video Transcript

So we know you guys both like Microsoft.

Um even before the, this this latest event, you guys both have outperform ratings on that one.

Fred with you, I wanna dig into a couple others because you like a couple of the cyber security names, including crowd strike.

You know, we recently heard from Palo Alto that seemed to make uh investors a little uncomfortable here.

Do you think uh the likes of a crowd strike are gonna benefit from A I as to how it relates to cybersecurity?

Or is it just a more general cybersecurity play?

So we do think that it relates like crowds is really benefiting.

I think from generative A I as a trend while they're not selling generative A I themselves.

We think that the advent of generative A I is making it much easier for Attackers to exploit a lot of things like for example, fishing attacks are becoming far more sophisticated.

Uh Attackers that want to build software are getting also just power ups now being able to use generative A I perhaps to actually build malware more effectively.

We think that Crowdstrike which protects the endpoint, it protects the device as the last line of defense against all those attacks that have penetrated every other of security is really well positioned to defend against the brand new unknown threats that we think are likely to emerge with the advent of generative A I.

So really like crowdstrike is our top pick for just overall trend based exposure to generative A I in the cybersecurity sector, Rishi 11 name I'm interested in.

So you got Apple forms on Microsoft CRM.

So, Fanella and Benioff, you also Richie like Zoom uh which has been a tough slog, you know, in, in the red richie year to date over the past 12 months.

Why is Zoom A buy here?

Yeah, I think Zoom has a really interesting play when it comes to A I there is so much unstructured data when you think about video and audio even, you know, non verbal communication that I think Zoom has a really interesting road map.

I think the hiring of actually from uh Microsoft was was a great one and I really like the kind of thought leadership m uh sorry Zoom has put out on having a Federated A I approach.

Um You think about things like sales coaching that uh it can tell sales people look, you're not making eye contact, stop wandering and make eye contact with your prospective customer.

Uh hr when you're doing interviews with people, hey, this body language suggests that uh um you know, prospective employee might be wrong or, or lying, maybe problem with one or two follow up question.

Um And I think about those use cases, maybe even vertical them for the contact center where contact center zoom has been getting a great amount of success.

I think Zoom is very much an underappreciated A I play in my book and I love that it will help be more human or interact better with other humans.

That's a sort of a fascinating offshoot of all of this.

You got 11 other one, you guys both like is sales force and Michelle take you quickly on this and then we'll get Fred's opinion on, on why you think it is gonna benefit here.

I mean, that stock has also had some exogenous things going on, activist pressure, etcetera.

Yeah.

Um I, I will say my uh bullishness on sales force is more related to the self help element of the story.

I think there's a lot of margin expansion from here.

Um There's a lot more cost cutting.

They can do a lot more efficiencies they can bring to the organization.

So the stock feels very much uh undervalued in my book.

And I think there's upside to numbers and upside to the multiple from an A I perspective.

I I will say maybe I'm a little counter consensus on this.

I want to see more out of sales force when it comes to A I in theory, they could be a huge beneficiary they're a system of record sales.

People, marketing people all rely on a day in day out and it's a huge platform with this massive ecosystem, but I just haven't seen enough innovation out of their A I road map where I would contrast that with hubspot, which is another name that we really like that has been showing a lot of innovation on the CRM front.

So I think Salesforce has its work cut out on the A I front.

All right, Fred quickly, I want to get your take.

Yeah, I think I'm I'm quite aligned here actually with how Rishi is approaching this.

I think in the big picture of the software space, uh Microsoft, of course, we talked about fantastic.

I think service now stands out to me as one of the top uh generative A I picks in our portfolio sales force.

I really like, I do think that you have an opportunity here to just thoroughly imbue generative A I A I throughout the entire sales force stack makes sellers customer service agents and the like much more powerful.

I do want to see them delivering more functionality, which I think they're able to.

And in the meantime, I do think that this overall margin expansion story with stable profitable growth is something that keeps the stock quite attractive and keeps us bullish on the name.