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Salesforce stock got a boost. Is it growing off the Nvidia boom?

Salesforce building. Salesforce intends to continue its investment in integration software, customer data and SMBs.

Most hype surrounds technology stocks, particularly after the king of the sector, Nvidia Corp. (NASDAQ: NVDA), kept breaking past all-time high prices on ever-increasing financial expansion. There is the risk of a "spillover" effect into other names.

Considering the new wave about to hit the business services sector of the United States economy, other "platform" tech stocks could soon attract the attention of traders and investors in the coming months. While you could try throwing darts at a board and have a good chance of succeeding today, the focus involves picking the best positive outliers for more considerable potential upside.

Because of these and other reasons that will become clear in just a second, stocks like Salesforce Inc. (NYSE: CRM) could follow in the footsteps of Nvidia by breaking past its all-time high prices. Even today, it is creating a near mirror image of another worthy mention in the services space already riding the wave of business boom: Intuit Inc. (NASDAQ: INTU).

What's happening?

Why is everyone gobbling up these stocks at the same time? It concerns two of the economy's most widely followed leading indicators — the same ones that the professional traders at investment houses like The Goldman Sachs Group (NYSE: GS) use to generate their ideas.

In a "top-down" research process, these players start by understanding what is happening in today's economy. According to the latest employment situation report, the U.S. economy added 353,000 jobs in the past month, a 63.4% increase from the 216,000 reading two months ago.

heating economy creating jobs needs the services of companies like Intuit to manage the added payroll and processes of hiring new employees, so stock rose by as much as 40.3% in the past two quarters as traders forecasted the economy's comeback.

Secondly, and more important for the demand for the services that Salesforce offers, is the ISM PMI index. Goldman analysts pointed out their expectation for a manufacturing breakout this year in their 2024 macro outlook report. 

Suppose manufacturing does break out in a newfound expansion. In that case, its distant cousin (services) will also be sucked into an upward spiral of activity, calling for Salesforce's help — it's one of the reasons why this stock now trades above its 52-week high prices and nears an all-time-high price of $311.70 a share.

Why Salesforce?

Analysts at Wells Fargo & Company (NYSE: WFC) and UBS Group (NYSE: UBS) have boosted their price targets on Salesforce stock to a respective $290 and $310 per share, which directly implies an upside of 7.4% and 14.8% from where the stock trades at today.

Autodesk Inc. (NASDAQ: ADSK) attracts some of the mentioned activity to its business model. The market still sides with Salesforce. By expecting earnings per share growth of only 7.3% in the next 12 months, Autodesk is beneath it all.

Salesforce analysts expect 20.1% EPS growth for the next year, a growth rate that is head and shoulders above Autodesk's and Intuit's 16.9% and above the industry average of 12.2%. Because EPS typically drives stock prices, this growth should be enough to point out why these price targets may be conservative for the stock.

Its 4.8x price-to-book ratio is below Intuit's 10.8x and Autodesk's 37.3x today, representing a discount of 55.5% and 87.1%, respectively. 

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