Jim Cramer is giving Salesforce a chance to prove naysayers wrong after a bearish analyst call Monday. Bank of America analysts reinstated coverage of Salesforce with a sell-equivalent rating and $160 price target. The analysts' core concerns include a slowdown in new customer growth, weakening pricing power and upsell opportunities, and an underwhelming monetization strategy for its flagship artificial intelligence product, Agentforce. Salesforce's stock "is disliked, but let's see what happens," said Jim Cramer during Monday's Morning Meeting . Jim said Bank of America's negativity around Salesforce's AI positioning flies in the face of what CEO Marc Benioff has espoused. But with the stock already down so much, Jim asked: "Do you really bail now?" Salesforce is also the smallest position in the Club's portfolio, with a weighing under 1%. Salesforce is catching a break Monday despite BofA's bearish view. Shares are up over 3% alongside a broader rally in software stocks. But the stock is still very much under pressure, down almost 40% in the last year and roughly 32% year to date, even with Monday's pop. Salesforce and many of its software peers have been weighed down by fears that artificial intelligence will cannibalize its core business. The concerns fall into two broad buckets. The first is that software companies' reliance on a seat-based business model is a problem if their customers slow their pace of hiring or reduce their headcounts thanks to AI. The second is that AI code-writing tools will enable more competition for incumbent software vendors, including customers potentially developing their own in-house applications for certain tasks. In its Monday note, Bank of America argued Salesforce is exposed to both risks. In particular, they see a messy transition as more of Salesforce's revenue comes from the lumpier consumption-based pricing associated with Agentforce and less is tied to predictable seat-based licenses. Salesforce's Benioff on multiple occasions pushed back on AI disruption claims and has worked to silence the critics who are skeptical of its AI strategy. Salesforce's traditional applications help salespeople, marketing professionals and customer service representatives do their jobs — for example, documenting all communication with potential and existing clients. In turn, the apps amass a ton of company-specific data. The goal with Agentforce is to help Salesforce's customers build AI agents capable of executing certain tasks autonomously, harnessing their proprietary data to make them more effective. On the company's February earnings call, Benioff said Agentforce closed over 29,000 deals since its launch and was pacing for $800 million in annual recurring revenue. CFO Robin Washington also said Salesforce was still growing its seat count, and that the introduction of Agentforce adds "incremental value to our software." She continued, "Some of it's going to be consumption based. But we're going to have a hybrid model. Seats will continue to be a key component of our growth going forward." Despite AI disruption threats on the overall software landscape, BofA is betting that industry rival ServiceNow will be a winner. It reinstated coverage of ServiceNow a buy rating and $130 price target. The big differentiation is this: "We think ServiceNow stands to benefit from, rather than be replaced by, new AI solutions," analysts wrote. Historically, ServiceNow's platform is used to help companies keep track of internal HR and IT workflows, such as requesting a laptop for a new hire. "In simple terms, ServiceNow wants to be the 'AI Control Tower' that governs what agents can access, what actions they can take, which workflows they can trigger, and how those actions are monitored," analysts wrote, referring to one of ServiceNow's key new products . They added, "ServiceNow's advantage is that it already sits inside the workflows where many of these actions occur." Still, Jim wants to stick with the Club's small position in Salesforce because of his confidence in Benioff. "Everybody keeps saying the same thing, which is the agentics business. It's not working for Marc," said Jim. But according to Benioff, the demand remains strong and is growing. "Marc has rarely ever, if ever said things to me that didn't come true," Jim said. (Jim Cramer's Charitable Trust is long CRM, . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
