Investing in stocks that offer exposure to a new growth industry can pay off in a big way. Just ask anyone who invested in Netflix back in 2007 when its video streaming service was first launched – that stock has risen from $3 to $1,200.
Here, I’m going to highlight a growth stock that offers exposure to a brand new industry with enormous potential. I’m wondering if buying this stock now could be like investing in Netflix 18 years ago?
An exciting new industry
The industry I’m talking about is agentic AI (or ‘AI agents’). This is technology that can perform business tasks autonomously. Today, this industry’s still in its infancy. Most people probably aren’t even aware of it. But it’s growing rapidly. And I reckon there’s huge long-term growth potential. Ultimately, every business in the world wants to increase productivity and efficiency. And with AI agents, they can.
It’s worth noting that some experts believe that in the long run, the market for ‘digital labour’ could be worth over $10trn. If it was to grow to that size, early investors are likely to make a lot of money.
A top stock for AI agents
At present, there are lots of companies developing AI agents. However, one company that has an edge, in my view, is Salesforce (NYSE: CRM). Its software’s already embedded in over 150,000 businesses worldwide. So it has a massive advantage over smaller start-ups that are trying to sell software to enterprises from scratch.
Salesforce launched its agentic AI service, Agentforce, last year. And it’s had a lot of success to date. Already it’s signed up 8,000 customers. Of these, around half are paying for the service.
Customers include the likes of Singapore Air, Finnair, PepsiCo, OpenTable, and Gucci. According to CEO Marc Benioff, these businesses are seeing unprecedented levels of efficiency. One reason the product’s working well is that it links up to Salesforce’s data services. This means that the AI agents have access to all the business information they need and can give timely, accurate responses to customers.
It’s worth noting that today, Agentforce is still a small part of the business. Currently, it and Data Cloud revenues are just $1bn on an annual recurring revenue (ARR) basis. Looking out over the next five to 10 years though, I see a lot of potential here. I believe Agentforce could lead to substantial business growth in the long run.
I’m buying now
Zooming in on the stock, it currently trades on a forward-looking price-to-earnings (P/E) ratio of 23. I think that’s a very reasonable valuation given the growth potential here. Note that the average analyst price target is $353. That’s about 34% above the current share price.
There are risks, of course. Two to think about are a competition from rivals such as Microsoft and ServiceNow, which have their own agentic AI tech, and an economic slowdown that leads to less business spending on technology. Overall though, I think the risk/reward skew looks very favourable.
I’ve been building a position in the stock in recent months and I think it’s worth considering today.
