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Why Salesforce.com, Inc. Jumped 11% in January

By Chris Neiger - Feb 7, 2018 at 10:26AM

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Optimism around AI and a price hike pushed the stock up last month.

What happened

Shares of Salesforce.com (CRM 2.60%) popped 11.4% last month, according to data provided by S&P Global Market Intelligence, after a Barclays analyst raised the the cloud-based sales and marketing software company's price target, and after Salesforce extended its artificial intelligence partnership with International Business Machines (IBM -0.91%).

So what

In a mid-January Barclays analyst note, Raimo Lenschow upped Salesforce's price target from $117 to $127, noting that artificial intelligence (AI) is adding to company's capabilities and will help Salesforce increase pricing and retain customers.

Image of stock chart trending upwards.

Image source: Getty Images.

That's not the first time Lenschow has been bullish on Salesforce's opportunities in AI. Late last year he said that software stocks have a $50 billion base-case opportunity in AI, and that Salesforce's is already an early adopter.

Salesforce also announced in January that it was expanding its AI partnership with IBM. The two companies have been working together on AI since last year and the latest announcement added to their partnership with Salesforcing naming IBM as its preferred cloud service provider and IBM naming Saleforce as its preferred customer engagement platform for sales and service.

IBM's Watson AI service works in collaboration with Salesforce.com's Einstein AI  to help customers identify sales leads.

IBM CEO Ginni Rometty said that, "This expanded partnership builds on the combined power of Watson and Einstein to help enterprises make smarter business decisions."

Now what

Unfortunately, investors haven't kept Salesforce's stock price momentum going in February, and its share price has dropped about 3% since the beginning of this month. But Salesforce, like many other cloud-based software companies, is tapping into the growing artificial intelligence for enterprise market. It may take time for the company grab a bigger piece of that market, but it's certainly taking solid steps in that direction with its Einstein AI and its IBM partnership.

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Stocks Mentioned

salesforce.com, inc. Stock Quote
salesforce.com, inc.
CRM
$159.65 (2.60%) $4.05
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$128.48 (-0.91%) $-1.18

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