Threats from Chinese artificial intelligence startup DeepSeek have severely rattled artificial intelligence leaders like Nvidia and Broadcom. But fellow AI stock ServiceNow is holding strong, and taking aim at a breakout with its relative strength line notching a 52-week high.
And while Nvidia gets deep-sixed from IBD Leaderboard, ServiceNow stock maintains its spot on this exclusive club alongside AI giants Meta Platforms and Alphabet.
After the Wall Street Journal reported on AI phenom DeepSeek on Sunday, shares of Nvidia and Broadcom sold off sharply on Monday. Broadcom gapped down and has sliced below its 50-day moving average. Nvidia did the same, extending its retreat with a drop below its 200-day line.
Bucking that sell-off in these AI leaders and the tech-heavy Nasdaq, ServiceNow briefly cleared an 1,157.90 buy point in a flat base. While shares have eased back, the stock stands strong with its base intact.
ServiceNow Stock In A Late-Stage Pattern
While ServiceNow is showing strength, keep two points of caution in mind. First, the AI leader's base is a late-stage chart pattern. Such formations entail more risk than early-stage setups.
Second, the provider of a cloud-based workflow automation platform is set to report earnings on Wednesday. Buying any stock just before it reports quarterly results adds risk, since investors don't know how a company will report or how Wall Street will react.
For the fourth quarter, analyst estimates call for ServiceNow to deliver a 22% rise in sales to $2.97 billion. The earnings forecast calls for a 27% year-over-year gain to $3.72 per share. For full-year results, analysts expect earnings to rise 19% to $16.61 per share.
Fellow IBD Leaderboard members Meta Platforms and Alphabet are also on tap to report soon. Like ServiceNow, Meta — which is in buy range from a third-stage flat base — reports on Wednesday. Alphabet will release its fourth-quarter and full-year results on Feb. 4.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
