In recent years, Artificial Intelligence (AI) has transformed from a futuristic concept to a cornerstone of modern business strategies. Its ability to streamline workflows, enhance customer experiences, and drive revenue growth has made it a highly sought-after technology across various industries. This rapid integration of AI into both the broader economy and the stock market presents a compelling investment landscape, albeit one with both opportunities and risks.
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AI’s potential to boost profits is undeniable. However, the current investment frenzy raises concerns about resource allocation, with some companies adopting AI without a clear strategic need, driven perhaps by a “fear of missing out” rather than genuine demand. The key for investors lies in discerning companies that can effectively leverage AI to unlock its true value. Leading Wall Street analysts are focusing on specific equities poised for significant gains as generative AI continues its transformative trajectory. Morgan Stanley, in particular, has highlighted two promising stocks, and we’ll delve into their analysis using insights from TipRanks to assess their potential.
Salesforce: Leading the Charge in Agentic Computing
Salesforce (CRM), a dominant player in the Customer Relationship Management (CRM) sector, boasts a market capitalization exceeding $329 billion and nearly $35 billion in revenue in its last fiscal year. Its cloud-based platform, designed to integrate sales, service, marketing, commerce, and IT functions, utilizes AI to provide intelligent automation and a unified view of customer data.
Salesforce’s recent partnerships with Google and Nvidia underscore its commitment to leveraging cutting-edge generative AI technology. This integration enables Salesforce’s tools to operate more autonomously, gathering broader data sets with reduced human intervention, effectively automating numerous back-office tasks. The company’s latest financial results, including a $90 million top-line beat and a 30% year-over-year increase in free cash flow, demonstrate its strong financial position.
Morgan Stanley analyst Keith Weiss, ranked among the top 1% of Wall Street analysts by TipRanks, emphasizes Salesforce’s potential to capitalize on emerging trends in the software industry. Weiss believes Salesforce is not just participating in the shift towards Agentic Computing but potentially leading it, positioning the company for substantial future value creation. His Overweight (Buy) rating and $405 price target suggest an 18% upside potential. The consensus analyst rating for Salesforce is a Moderate Buy, with an average price target of $398.34, indicating a 16% potential gain.
Elastic: Empowering Data Search with Generative AI
Elastic (ESTC), specializing in data search, has garnered attention for its AI-powered platform designed to optimize local data searches. By facilitating swift and efficient database queries, Elastic enables clients to extract maximum value from their data, addressing the critical challenge of navigating vast data volumes in the digital age.
Elastic’s cloud-based platform utilizes generative AI to provide a seamless real-time data searching service, eliminating the need for users to manage AI infrastructure. Its natural language processing capabilities further simplify data access and analysis. Beyond database search, Elastic offers observability and security solutions, including the innovative Search AI Lake, a serverless generative AI tool designed for scalability and adaptability. Serving diverse industries and prominent clients like Land Rover, Cisco, and Comcast, Elastic’s strong fiscal Q2 2025 performance, with revenues exceeding expectations by $10.7 million, reinforces its growth trajectory.
Morgan Stanley analyst Sanjit Singh highlights Elastic’s potential for accelerated growth as enterprises modernize their search workloads with generative AI and vector search technology. Singh believes Elastic is well-positioned to maintain market share, driven by the positive impact of generative AI. His Overweight (Buy) rating and $130 price target suggest a 25% upside potential. The consensus analyst rating for Elastic is a Strong Buy, with an average price target of $131.58, indicating a potential gain of nearly 27%.
Conclusion: Capitalizing on the AI Revolution
Both Salesforce and Elastic represent compelling investment opportunities in the burgeoning field of generative AI. Their ability to leverage AI to enhance existing product offerings and address critical market needs positions them for continued growth. While risks inherent in the rapidly evolving AI landscape remain, these two companies, backed by strong analyst sentiment and robust financial performance, appear poised to capitalize on the transformative power of AI. Thorough due diligence is always recommended before making any investment decisions.
