Artificial intelligence software maker ServiceNow got a rating boost Wednesday as its Relative Strength (RS) Rating jumped from 79 to 84. Last week and early this week tech stocks sold off hard, led down the rabbit hole by AI chip king Nvidia. Techs took the lead again starting Tuesday. But while the tech downturn was happening, ServiceNow stock continued its upward march.
The raised 84 RS Rating shows that ServiceNow stock bested 84% of all stocks over the past year for price appreciation. Why is that important? Market research shows that the best stocks typically have an 80 or better RS Rating in the early stages of their moves.
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ServiceNow Stock Gains Tied To AI Tsunami
ServiceNow, seen as one of the best stocks to buy and watch, develops cloud-based IT software for workflow automation, business administration and other applications. In the company's first quarter earnings report ServiceNow Chairman and CEO Bill McDermott commented on the company's leadership position in the emerging AI market.
"As leaders seek significant productivity improvements, ServiceNow has first mover advantage with years of investment in AI technology and talent. Our GenAI offerings are the fastest selling in the company's history," McDermott said.
ServiceNow stock has been trading in a fairly narrow range since early February as it consolidates gains. It hit an all-time high at 815.32 on Feb. 9. The software maker then dropped to a 640.17 low on May 30 and bounced. It has risen hockey-stick style and is rapidly nearing its all-time high again.
On track to have risen five of the last seven days, ServiceNow stock traded around 755 Wednesday afternoon.
Reaching For February All-Time High
ServiceNow is trying to complete a consolidation with the prior high 815.32 entry as its buy point. See if the stock can break out in heavy trading. It's a later-stage pattern, and investors should be aware that those can succeed but are less likely to work than stage one and two bases.
Earnings grew 44% last quarter to $3.42 per share, on a 24% increase in revenue to $2.6 billion. Over the last four quarters EPS growth ranged from 36% to 49% as sales growth ranged from 23% to 26%. Keep an eye out for the company's next round of numbers on or around July 24.
ServiceNow stock holds a lofty No. 3 rank among its peers in the 123-stock Computer Software-Enterprise industry group. Magnite, a small-cap that provides software to automate digital advertising, is the No. 1-ranked stock in the group.
IBD's proprietary Relative Strength Rating identifies market leadership by showing how a stock's price action over the last 52 weeks measures up against that of other stocks on the major indexes.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
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