Why ServiceNow Stock Was Gaining Today
What happened
Shares of ServiceNow (NYSE: NOW) were moving higher today as investors continued to react positively to yesterday's analyst day conference.
The cloud software stock also seemed to benefit from the broader gains in the market as investors cheered news that the debt ceiling standoff could soon come to an end.
The stock closed up 5.3% on Wednesday.
So what
ServiceNow made several high-profile announcements yesterday that seemed to delight investors, spending much of the event talking up its investments in artificial intelligence (AI).
The company announced a generative AI Controller, which connects its Now platform to generative AI tools like Open AI and Microsoft Azure, and it unveiled Now Assist for Search, which uses natural language processing to pull information and make searching across the customer environment easier. ServiceNow also said it is expanding its strategic partnership with Microsoft around AI and other use cases.
The software-as-a-service (SaaS) stock also announced its first-ever share repurchase authorization, allocating $1.5 billion to buy back stock, primarily to offset the dilutive effect of stock-based compensation.
Also today, ServiceNow took another step forward in AI, announcing a partnership with AI chip titan Nvidia to develop "powerful, enterprise-grade generative AI capabilities that can transform business processes with faster more intelligent workflow automation."
Now what
Analysts generally applauded the announcements yesterday as several Wall Street firms raised their price targets on the stock, and Piper Sandler urged investors to buy the stock, calling it its top infrastructure pick.
The company did dial down its 2024 subscription revenue target from $11 billion to $10.4 billion due to macroeconomic and currency headwinds, but investors seemed to look past that given its investments in AI and new product development.
ServiceNow has been a longtime winner on the stock market, delivering consistent growth, and the company appears to be making smart moves to add new customers and expand its existing relationships with the new AI products.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft, Nvidia, and ServiceNow. The Motley Fool has a disclosure policy.
