Salesforce and 6 Other Tech Stocks Beyond Apple to Hold for the Long Haul 

The stocks might struggle in the near term because many investors have already loaded up on them. But tech investors, especially those who bought earlier this year, should hold them for the long term. Many are at the center of the emergence of AI or simply stand to benefit from the continued growth of the overall software business.  

That is a reason to avoid smaller tech names. Many of those won’t be able to compete with larger firms, which are using their ample profits to invest heavily in AI. Some small companies may get bought out, but not most. 

“I have a hard time making the case that some of these small cap AI names are going to be around 10 years from now,” said Jason Ware, chief investment officer at Albion Financial Group. “When you go up market cap, those are interesting opportunities.” 

Software analysts at Evercore published a note last week arguing that several larger tech companies have ample potential for profit growth and stock-price gains. 

One example is
Salesforce
(CRM). The cloud-based provider of customer-relationship software is expected to post 11% sales growth this year, and then to sustain similar increases for the next three years, according to the consensus call among analysts tracked by FactSet. That would bring sales to just over $47 billion by 2026.

The company is layering in new products to complement customers’ existing software, helping businesses efficiently target sales opportunities. Some of the new products are AI-based, and more such offerings could arrive soon, especially in financial services, where Salesforce won new customers in the second quarter. 

“Everyone is waiting for the ‘killer AI app’ in certain verticals that will illustrate the power of AI and create a bit of a domino effect in terms of demand…and financial services being the industry most poised to jump on any AI solutions that can deliver value,” wrote Evercore analyst Kirk Materne.  

Sales growth should bring higher profit margins and earnings. The company has shown this year that it can keep its head count and marketing spend down enough to lift its margins. If spending doesn’t rise too fast, margins can keep inching higher, as analysts have forecast. The consensus view is that EPS will grow just over 20% annually to reach $14.39 by 2026. 

The best news of all is that the stock isn’t wildly expensive. At $222, it trades at about 15 times estimated 2026 EPS. Assuming the outlook for growth doesn’t slow down too much by 2025, the stock should maintain that valuation. After all, the S&P 500 has been trading at a multiple in the mid-to-high teens in the past few years.

If the stock remains at the same price/earnings ratio, bigger profits would lift the shares. Materne’s price target is $275. He says expectatons for profits should rise as Salesforce rolls out AI-based products.

And then there is
Intuit
(INTU), provider of QuickBooks accounting software for businesses and TurboTax for consumers. Small-business revenue, based on a few million customers today, can grow about 16% annually for the next two years at least, according to consensus estimates. There are more than 30 million small businesses in the U.S., according to the Small Business Administration, so the growth can continue for many years. It’s Intuit’s fastest-growing segment. 

The combination of that growth with rising prices on some other products could boost total revenue by percentages in the low double digits over each of the next two years to $19 billion by 2025. Materne says that while weaker results over the next few quarters—the result of fewer people filing tax returns—may temporarily derail progress toward that goal, Evercore has “a high degree of confidence in INTU as a durable double-digit top-and-bottom-line compounder.” 

The sales growth could be enough to lift profit margins slightly over the next couple of years.

Other stocks Evercore listed include
Microsoft
(MSFT)
Adobe
(ADBE),
Oracle
(ORCL),
ServiceNow
(NOW) and
Snowflake
(SNOW). Hold ’em, don’t fold ’em.  

Write to Jacob Sonenshine at [email protected]