Finding a good growth stock is all about identifying a company with a product or service set that’s in high demand and not too prone to attack or failure. The right organisations in the technology industry have a significant advantage in that they often have infrastructure that’s very hard to replicate. For example, they may have patents, very expensive machinery, and talent with skills that are difficult to source as a competitor. I find one such company in particular very compelling. It’s name is Salesforce (NYSE:CRM).
Why I invest in artificial intelligence
Some people say investing in technology is risky because the valuations of the companies are too high. They’re right in saying investments are more prone to volatility in the share price as a result. However, if we look at some of the richest people in the world, many of them are technology company founders and executives. So, I think it is a big mistake not to invest in tech.
Instead, I think the challenge is finding quality companies. I need to do a lot of homework on them. Then, I need to invest in the ones I am sure are worth my cash.
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I believe there are a lot of technology companies out there that aren’t going to survive over the long-term. However, Salesforce has developed a strong moat in retail AI. There are many other firms like Adobe, SAP, and Oracle that offer platforms for workplace management. But Salesforce has really honed in on the retail aspect. It has developed a comprehensive customer relationship manager, or CRM, which I think is worth me investing in.
Salesforce has delivered exceptional growth
I think the company may just be getting started. Unlike Apple, which has been growing for a large portion of the last century as well as this one, Salesforce was only listed on the public stock market in 2004. It’s had an immense run since then, growing around 6,300% in price.
However, I don’t think we’ve seen the full potential of Salesforce yet. As the consumer retail industry realises more and more the power of AI, I think it’s going to become standard practise to have Salesforce’s systems running shops across the world. After all, Salesforce helps to drive efficiencies in business, which is going to provide more profits for the company owners. That’s the best incentive one can have for buying a product or service.
Is AI in retail essential?
The main problem I see with Salesforce is that the valuation is very high. This could cause greater risk if the business results aren’t as high as analysts are currently expecting. There’s some chance that Salesforce will deliver slower growth if the retail market at large begins to treat AI as a luxury rather than an essential. I think this is unlikely due to the cost-effectiveness over the long-term of implementing Salesforce’s offerings. But if it does happen, then the competitive pressures won’t be there to drive the growth Salesforce arguably could achieve. Therefore, it’s important that I invest in the firm as part of a well-diversified portfolio.
I’m currently a Salesforce shareholder. While it’s not the largest holding I have, it’s one I believe strongly in. Therefore, I’ll likely add to my position in the coming months.
