We recently published a list of 9 Buzzing AI Stocks to Watch on Latest News. In this article, we are going to take a look at where ServiceNow Inc (NYSE:NOW) stands against other buzzing AI stocks to watch on latest news.
Doug Clinton, Intelligent Alpha founder, talked recently about the issue of scaling in AI on CNBC and said that in the past the improvement of AI models was surging based on the data inputs. However, Clinton referred to the recent reports of AI models hitting a plateau in performance. He believes this issue will be important for AI investors in the coming months and years.
“Just to give the quick 101: Over the last few years, what we’ve seen in AI model development is that the more data you put into these models and the more compute you use to train them, the better the models get—very predictable. However, recent reports from OpenAI and Google show that the latest models they’ve trained haven’t been as good as expected based on scaling laws. This has sparked debate in Silicon Valley. Even Sam Altman tweeted about it last week, saying, “There is no wall,” so maybe it’s not an issue—we’ll see. But I think Jensen really needs to address that question because the 18 to 24-month picture hinges on whether these companies will need to invest in something beyond just compute.”
However, the analyst is bullish on the broader AI market in the long term and believes companies are just getting started in this bull market.
“I think if you take a longer-term view—2 to 4 years—we’re still very confident we’ll be in an AI bull market. That doesn’t mean there won’t be pullbacks here and there, but I think we have a long way to go. Companies are really just starting to adopt AI, and we’ll begin to see those revenues over the next year and beyond.”
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For this article we picked 10 AI stocks trending on latest news and analyst ratings. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of software engineers at desks working on code for a cutting-edge cloud computing solution.
ServiceNow Inc (NYSE:NOW)
Number of Hedge Fund Investors: 97
Tony Wang, T. Rowe Price portfolio manager, recently talked about his top tech picks on CNBC. ServiceNow Inc (NYSE:NOW) is one of the stocks he’s bullish on.
ServiceNow Inc (NYSE:NOW) impressed the market with strong Q3 results. But can the stock keep going higher? ServiceNow Inc (NYSE:NOW) recently launched its Now Platform Xanadu, adding more than 350 out-of-the-box generative AI capabilities to Now Assist. These features include data visualization automation, chat- and email-reply generation, change summaries, and LLM-based proactive prompts in Virtual Agent.
ServiceNow Inc (NYSE:NOW) also released RaptorDB Pro, a high-performance database enabling customers to centralize operational data and analytics onto ServiceNow platforms. These platforms are expanding the company’s abilities in the IT market.
ServiceNow Inc (NYSE:NOW) bulls believe the company’s organic revenue growth after fiscal 2025 could clock in between 20% to 22%. ServiceNow Inc (NYSE:NOW) can also expand its margins by 250bps annually, driven by 100bps from gross profits, 100bps from R&D reductions, and 50bps from SG&A leverage.
ServiceNow Inc (NYSE:NOW) will also benefit from organic growth catalysts. Grand View Research predicts that the global information technology service management (ITSM) market will grow at a CAGR of 9.3% from 2023 to 2030.
Polen Focus Growth Strategy stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q3 2024 investor letter:
“In the third quarter, the top relative contributors to the Portfolio’s performance were NVIDIA (not owned), Shopify, and ServiceNow, Inc. (NYSE:NOW). ServiceNow reported better-than-expected sales and bookings during the quarter, with subscription sales up +23%. Encouragingly, GenAI offerings within its product suite, rolled out in late 2023, already appear to be an incremental driver of this growth. In our view, ServiceNow is a great example of a consistent grower, with a strong moat serving diverse and growing end markets with expanding margin opportunities over time.”
Overall, NOW ranks 6th on our list of buzzing AI stocks to watch on latest news. While we acknowledge the potential of NOW, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.