The Customer Relationship Management (CRM) industry has evolved significantly in recent years, driven by the integration of artificial intelligence (AI) and machine learning (ML), as well as the demand for personalized customer experiences. What was once just a tool for managing customer data has transformed into a comprehensive ecosystem for improving customer engagement, sales, marketing, and service delivery.
According to MarketsandMarkets, the global customer engagement solutions market is expected to be worth $32.2 billion by 2027. Salesforce (CRM) and Braze (BRZE) are two companies that stand to benefit from this growth. Let's find out why Wall Street is so optimistic about these two stocks.
#1. Braze
Braze (BRZE), founded in 2011, is a rising star in the tech sector, specializing in customer engagement platforms that allow businesses to create personalized, data-driven interactions with their audiences. Braze's AI-enabled platform allows businesses to communicate with customers via email, SMS, push notifications, in-app messages, and other channels.
Valued at $4.0 billion, Braze stock has fallen 26.9% year-to-date, compared to the S&P 500 Index’s ($SPX) gain of 25.7%.
Braze has experienced impressive revenue growth, thanks to its ability to attract new customers and expand its relationships with existing ones. In the second quarter of fiscal 2025, total revenue of $145.5 million increased by 26.4% year on year due to "new customers, upsells, and renewals." Subscription revenue, which provides stability and predictability, increased 27.6% during the quarter.
The total number of customers stood at 2,163, representing a 10% increase over the previous year's quarter, with 6.7 billion monthly active users. This demonstrates Braze's ability to increase revenue from existing customers. In addition, RPO (remaining performance obligation), which is contractual revenue that has not yet been recognized, totaled $689.6 million.
Braze, like many other growth-stage tech companies, struggled to achieve profitability as it invested heavily in R&D and market expansion. However, in the second quarter, it reported its first adjusted net profit of $0.09 per share, up from an adjusted net loss of $0.04 in the previous year's quarter.
As businesses prioritize customer engagement, Braze's addressable market expands, aided by its scalable, cloud-based infrastructure. Its newly launched Braze Data Platform will enable data unification for improved personalization and relevance through an enhanced ecosystem.
The company is also expanding its customer base by signing new business agreements with Papa John's Pizza (PZZA), Strawberry Hotels, Loan Depot, Asiana Airlines, and several others. Braze will report its third-quarter fiscal 2025 results on Dec. 9. Management anticipates a loss of $0.01 per share on revenue growth of 19.3%, which is consistent with analyst estimates.
Analysts expect Braze's revenue to rise 23.9% to $584.4 million in fiscal year 2025, with a profit of $0.07 per share. In fiscal 2026, earnings could rise to $0.28 per share on $689.6 million in revenue.
What Does Wall Street Say About BRZE Stock?
Overall, Wall Street rates Braze stock a “strong buy.” Of the 19 analysts covering Braze stock, 16 rate it a “strong buy,” while two recommend a “moderate buy,” and one recommends a “hold.”
Its mean target price is $53.33, which implies an upside potential of 37.4% from current levels. Plus, its high target price of $75 suggests that the stock could rise as high as 93.2% over the next 12 months.
#2. Salesforce
Salesforce (CRM), with a market capitalization of $328 billion, is a global leader in customer relationship management (CRM) software. Salesforce operates on a subscription-based SaaS model, providing software solutions via the cloud. This model generates predictable recurring revenue while allowing customers to scale their usage based on business requirements.
CRM stock has risen 25.4% so far this year, outperforming the Dow Jones Industrial Average's ($DOWI) gain of 18.7%.
The company's main offerings are sales, service, marketing, and commerce cloud. With acquisitions such as Tableau and Slack, it has expanded its portfolio to include data analytics and MuleSoft for data integration, catering to a wide range of business needs.
Salesforce has consistently delivered strong financial results, demonstrating both its growth potential and market dominance. Revenue increased by 8% year on year in the second quarter of fiscal 2025, reaching $9.33 billion. Subscription and support revenues increased by 9.4%, while professional services and other revenues fell by 6% during the quarter. Its RPO totaled $26.5 billion. Diluted earnings increased 14.8% to $1.47 per share during the quarter.
Salesforce's focus on AI, particularly through the Einstein platform and its new Agentforce AI platform, will continue to drive demand. It recently collaborated with Nvidia (NVDA) to combine the NVIDIA AI Enterprise platform and Agentforce to improve customer productivity and shape the future of enterprise software.
CRM is due to announce its third-quarter fiscal 2025 results on Dec. 3. Management anticipates a 7% increase in revenue to $9.31 billion to $9.36 billion, with adjusted EPS in the $2.42 to $2.44 range.
For the full fiscal year 2025, analysts forecast Salesforce to report revenue and earnings growth of 8.6% and 22.9%, respectively. For fiscal 2026, revenue and earnings are expected to grow by 9% and 10.6% year-over-year. As businesses increasingly adopt AI-driven insights, thanks to its innovative products, comprehensive ecosystem, and commitment to customer success, Salesforce’s growth prospects remain robust.
Salesforce stock appears to be somewhat expensive, trading at 30 times forward 2026 earnings and seven times forward sales. However, given its CRM leadership position and AI prospects, the premium appears to be justified.
What Do Analysts Say About CRM Stock?
Wall Street, in general, is strongly bullish about Salesforce stock. Out of the 44 analysts that cover CRM stock, 31 scream a “strong buy,” while three recommend a “moderate buy,” nine rate it a “hold,” and one suggests a “strong sell.”
Salesforce stock has surpassed its average target price of $337.77. Its high target price of $425 implies an upside potential of 28.8% over current levels.
