Investors have spent the past few quarters looking at how companies are spending on AI. Some of that is to see how that spending is impacting the bottom line. Companies that spend without early results are starting to get punished.
Likewise, companies that have been investing in AI and are seeing a payoff are being rewarded by the market. Companies that can grow their AI-driven services, even if they spend more on AI, could be winning trades for investors.
For instance, workflow software giant
ServiceNow (NOW) reported strong earnings, and even increased their full-year guidance. That’s because they’re starting to see a benefit from AI use, even as they increase their spending on AI services.
ServiceNow just hit $2.8 billion in quarterly revenues, handily beating earnings, which are now up 78% over the past 12 months. That’s on top of an earnings beat each of the past four quarters.
Action to take: ServiceNow’s approach to AI agents is paying off, and should continue to reward shareholders going forward. That makes the stock a worthwhile tech buy now. Investors should look to add to any position on a market decline.
For traders, the January 2025 $1,100 calls, last trading for about $13.40, are aggressive, but could see high double-digit returns on a strong enough year-end rally.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.