We recently compiled a list of the 8 Fast-Growing Software Stocks That Will Be Profitable in 2024. In this article, we’ll take a look at where Salesforce Inc. (NYSE:CRM) stands against the other fast-growing software stocks.
The software industry: an analysis
The software market is experiencing robust growth, driven by various trends and technological advancements. According to Precedence Research, the size of the global software market was $659.17 billion in 2023. Looking ahead, the market is expected to grow at a compound annual growth rate (CAGR) of 11.8% between 2024 and 2034, reaching $2.24 trillion by the end of the forecast period. In 2023, the North American region led the software market, with a substantial 44% share. The Asia Pacific region is expected to witness significant growth during the forecast period.
A key factor impacting the market is the rise of artificial intelligence (AI). AI technologies are being integrated into software solutions to improve efficiency and automate repetitive tasks. A Salesforce survey shows that 85% of IT leaders expect AI to increase developer productivity over the next three years. This expectation underscores the growing recognition of AI’s role in streamlining workflows and optimizing software performance.
Another important trend is the shift to cloud-based software. Businesses are migrating from traditional on-premises solutions to cloud services because of their flexibility, scalability and cost-effectiveness. This transition allows companies to access applications remotely and across devices, which has become crucial in today’s digital landscape.
The 2024 AlgoSec State of Network Security report highlights a notable shift toward multi-cloud environments. The study, based on surveys conducted in the second half of 2022 and 2023, evaluated major players such as AWS and Microsoft Azure. It indicates that security, continuity and compliance are key factors driving organizations to adopt cloud platforms. As cloud adoption grows, Azure remains the most popular platform, with AWS rapidly gaining ground.
The report also shows that the move to remote work has significantly driven the deployment of Software-Defined Wide Area Networks (SD-WAN), reducing the percentage of organizations without SD-WAN from 55.2% in 2022 to 34% in 2023. Secure Access Service Edge (SASE) has become a popular solution for organizations by consolidating security functions into a unified cloud service. Additionally, firewall deployments have skyrocketed, with only 7.1% of respondents reporting no firewalls in 2023, down from 28.4% in 2022. This trend reflects a growing focus on securing cloud networks against external threats.
With an overview of the global software market in mind, let’s take a look at the eight high-growth software stocks that will be profitable in 2024.
Methodology
To compile our list of the eight high-growth software stocks that will be profitable in 2024, we used stock screeners from Finviz and Yahoo Finance. We sorted our results by market capitalization and selected the 50 largest software companies by market capitalization.
To narrow our list to high-growth software stocks, we focused on companies with a compound annual growth rate (CAGR) in net revenue above 18% over the past five years.
We then focused on profitability. Based on this initial list of high-growth software stocks, we narrowed our picks to stocks with positive trailing-twelve-month (TTM) net income and stocks with positive net income growth over the past five years.
To ensure the reliability of our findings, we consulted reputable sources such as SeekingAlpha, which provided insight into the net revenue CAGR and revenue CAGR over the past five years, and YCharts, which provided information on the TTM net -revenue.
Finally, from this list of high-growth software stocks that met our criteria, we focused on the top 8 stocks most favored by institutional investors. Data on hedge fund sentiment around each stock comes from Insider Monkey’s database of 912 elite hedge funds. The eight high-growth software stocks that will be profitable in 2024 are ranked below in ascending order based on the number of hedge funds that held stakes in them as of the second quarter of 2024.
Why do we care what hedge funds do? The reason is simple: our research shows that we can outperform the market by imitating the best stock picks from the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (see more details here).
A customer service team in an office environment that uses the company’s Customer 360 platform to communicate with customers.
Salesforce Inc. (NYSE:CRM)
TTM net income: $5.63 billion
5-year net income CAGR: 42.75%
5-year revenue CAGR: 19.88%
Number of hedge fund holders: 117
Salesforce Inc. (NYSE:CRM) is a leading American cloud-based software company specializing in Customer Relationship Management (CRM) software and applications spanning sales, customer service, marketing, e-commerce, analytics and application development. As the world’s best AI CRM platform, Salesforce serves more than 150,000 companies with its cloud-based software solutions.
The company is making significant progress in transforming enterprise software with its new Agentforce AI platform. This innovative platform allows companies to create and customize autonomous agents that can automate workflows for various functions such as sales, service and marketing. By integrating its core technologies with AI capabilities, Salesforce improves customer interactions and improves overall efficiency. The company has already achieved impressive results, closing 1,500 AI deals in the second quarter of fiscal 2025, reflecting strong demand for its AI-driven solutions.
Recently, Salesforce Inc. (NYSE:CRM) announced that it has signed a definitive agreement to acquire Tenyx, a developer of AI-powered voting agents. This acquisition will expand the company’s autonomous agent capabilities and improve customer service interactions.
For the second quarter of 2025, Salesforce reported revenue of $9.33 billion, up 8% year over year. The company’s operating cash flow was $892 million, up 10% year over year. In the second quarter, the number of paid customers increased 130% compared to the same period last year, and the number of customers spending more than $1 million annually nearly doubled. Salesforce Inc. (NYSE:CRM) returned $4.3 billion to shareholders through share repurchases and issued nearly $400 million in dividend payments to shareholders.
These results underline the company’s strong financial performance and commitment to leveraging AI for future growth.
Residual performance obligations (RPO), which represent all future revenue under contract, reached $53.5 billion at the end of Q2 2025, representing an increase of 15% year over year.
Over the past five years, Salesforce Inc. (NYSE:CRM) grew its revenue at a compound annual growth rate (CAGR) of 19.88%, while net income increased at a CAGR of 42.75% over the same period.
According to Insider Monkey’s database of over 900 hedge funds in the second quarter of 2024, 117 hedge funds had stakes in Salesforce Inc. (NYSE:CRM).
Parnassus Investments stated the following regarding Salesforce Inc. (NYSE:CRM) in its “Parnassus Growth Equity Fund” investor letter for the second quarter of 2024:
“Salesforce Inc. (NYSE:CRM) growth continues to moderate and investors question its prospects when it comes to AI. We remain confident that the company, which developed the original Salesforce automation product and pioneered the SaaS (Software as a Service) delivery model, is well positioned to take advantage of emerging AI capabilities.”
In short, CRM is in 1st place on our list of fast-growing software stocks that will be profitable in 2024. While we recognize the potential of CRM as an investment, our belief lies in the belief that AI stocks hold greater promise for delivering higher returns in a shorter period of time. frame. If you’re looking for an AI stock that’s more promising than CRM, but trades at less than five times earnings, check out our report on the cheapest AI stocks.
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Disclosure: None. This article was originally published on Insider Monkey.
