Salesforce's strong competitive moat (institutional records) protects against AI disruption, supporting margin expansion and making it a good investment at current prices.

congratulations, you literally made millions of dollars in one day thanks to a crashed software stock called, I'll reveal, Salesforce. It has recorded incredible numbers.

I'm interested when a stock is crashing like Salesforce, how do you distinguish between a genuinely mis-valuation of the company and something that's cheap for some reason?

Yes, that's the crux of the matter because it's always cheap for some reason. The question is, what is the reason? How long will this problem last? This is what we really delve into.

It is interesting how Buffett determined the answer to this question. It is defined by intrinsic characteristics that competition cannot truly replace. They are trying to storm the fortress with artificial intelligence now, but they cannot because they represent the institutional record.

All those records they track are essential to the entire company's operations. And if you don't have that, I don't care what kind of AI you have, you can't replace these.

We realized that some of them did not have that and that they were in real danger of being replaced. We saw that these people have a huge moat protecting them from artificial intelligence competition.

Not only that, but they will also be able to use artificial intelligence tools themselves. What they really need to deal with is simply changing the way they are paid for what they provide.

They are in the process of doing so. Therefore, you cannot do without them. They must be present. Then the question becomes simply how much you are going to pay them. We believed that this was the real risk to our investment: Could there be a radical change in the way these people are paid?

Then we realized that this is exactly what "trench warfare" (competitive advantage) is meant to protect, and that is how much it charges. It exists to protect profit margins. The competitive advantage these people possess is extremely important to any company.

The company will have to pay them back at least what it was paying them, if not more, won't it?

At the same time, Salesforce's operating expenses may be affected by artificial intelligence in a very positive way. Therefore, we may see an expansion in their profit margins.

It is unlikely that we will see a contraction in their profit margins. We will not see a decrease in their revenues. Their price was very good. So, yes, we thought that was a good thing.

For Salesforce, the end of the problem is happening faster than we thought, as Wall Street will begin to realize that artificial intelligence will not affect them. What gives you confidence in the case of "Salesforce," or in any other stock in general?

What gives you confidence that they already have an economic buffer, and that they will be able to get through this phase?

So, I'm interested in, say, a company like Salesforce, or any company you end up buying. It doesn't have to be Salesforce. What is this concept of the margin of safety, and how do you actually apply it?

How do you know that Salesforce —it could be a great company, of course—is also priced to make it a good investment?