The artificial intelligence tsunami has swept through most industries with AI chip giant Nvidia riding that wave to record highs before a recent rash of selling dragged shares down. But fellow IBD Leaderboard member ServiceNow stock — an AI leader in its own right — hovers near a buy zone, boosted by two new partnerships and a recent acquisition.
Now trying to find its footing, Nvidia shot up 4% Monday but remains below key moving averages.
ServiceNow Gains AI Traction
As a result of its recent troubles, Nvidia has dropped below two key moving averages. It's also fallen off the IBD 50, IBD Big Cap 20 and IBD Sector Leaders. Meanwhile, ServiceNow stock still earns a spot on the IBD 50 list of top growth issues.
ServiceNow popped after reporting second-quarter earnings on July 24. Analysts touted how the enterprise software company continues to gain traction in artificial intelligence. The Santa Clara, Calif.-based firm focuses on taking the complexity out of AI while tapping into its power with the Now Platform.
ServiceNow's strategy has generated strong and steady growth. Over the last eight quarters, revenue growth has ranged from 20% to 26%. In the second quarter, revenue came in at $2.63 billion, a 22% year-over-year gain.
Earnings growth has ranged from 26% to 56% over the last eight quarters. Second-quarter profits rose 32% to $3.13 per share. Analysts expect an 18% rise in earnings to $3.45 per share in the third quarter, leading to $13.78 for the full year — a 28% gain.
Expanding AI Push With Two Partnerships, One Acquisition
Just last month, ServiceNow furthered its push into AI, unveiling two strategic partnerships and one acquisition.
SercviceNow announced a strategic investment in Prodapt, a leading telecom services and technology partner. The Prodapt deal marks the first ServiceNow Ecosystem Ventures investment targeting that industry segment, Prodapt will focus on the development of new telecom industry‑specific, AI‑enabled solutions for its clients.
On July 24, ServiceNow and fellow tech player Boomi announced the two firms will team up to elevate customer experiences through AI-powered self-service. Boomi is a leader in intelligent integration and automation.
The partnership taps into AI‑powered self‑service with solutions including ServiceNow Technology Provider Service Management. Plus, as a key customer of ServiceNow, Boomi will use the ServiceNow App Engine to deliver streamlined customer support and improved self‑service.
On the same day as the Boomi deal, ServiceNow also acquired Raytion to enhance GenAI-powered search and knowledge management capabilities on the Now Platform. Raytion is a tech business consultant.
ServiceNow says Raytion's information retrieval technology will enable unified real‑time access to business‑critical data across multiple enterprise sources. The goal is to create a more powerful, efficient, and personalized AI search experience on a single technology platform.
ServiceNow Stock Teases Return To Buy Zone
After breaking out past an 815.32 buy point on earnings, ServiceNow stock quickly pulled back. As Nvidia and the tech-heavy Nasdaq took multiple hits in late July, ServiceNow retreated sharply to its 50-day moving average. But shares of ServiceNow immediately found support and bounced off that line.
Since then, ServiceNow has remained solidly above the 50-day line while also holding support above its 21-day exponential moving average.
With its relative strength line continuing an upward trend, ServiceNow closed Monday's session just 1% shy of 815.32 buy point it cleared earlier.
Meanwhile, Nvidia remains mired below its 21-day and 50-day lines, but is trying to rally. The stock has come off the low it hit Aug. 5 to bounce back above the 100-per-share mark. Next up, Nvidia aims to retake its 21-day line, which remains in downward trajectory after crossing below the longer-term 50-day benchmark at the beginning of the month.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
