Monday's IBD 50 Stocks To Watch pick and artificial intelligence leader ServiceNow is nearing an official buy point after flirting with a trendline entry in recent days. That makes the AI stock one of the best to watch right now in today's stock market.
ServiceNow develops cloud-based information technology software for workflow automation, business administration and other applications. In the company's first-quarter earnings report, ServiceNow Chief Executive 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.
On April, 24, ServiceNow reported first-quarter earnings and revenue that topped Wall Street estimates. Some key financial metrics edged by expectations while the company's own forecast came in slightly below views.
ServiceNow said earnings for the quarter ending March 31 rose 44% to $3.41 per share on an adjusted basis from the year-earlier period. Also, revenue rose 24% to $2.6 billion, the Santa Clara, Calif-based company said.
Current-quarter estimates call for earnings of $2.82 per share, up 19% vs. the year-ago period, according to IBD MarketSurge. ServiceNow earnings are expected to jump 25% in 2024 and another 20% in 2025.
Be sure to read how to adjust to changing market conditions, with IBD's new exposure levels.
AI Stock Eyes Official Buy Point
In recent sessions, ServiceNow stock cleared a trendline entry near 780, which briefly placed the AI stock in a new buy area. But shares tumbled more than 4% Monday midday, and fell below that entry, after Guggenheim downgraded the stock from neutral to sell, with a price target of 640.
Still, shares are approaching an 815.32 official buy point in a consolidation, according to MarketSurge pattern recognition. The 5% buy area will go up to 856.09.
With IBD's recommended equity exposure range at 80%-100%, investors should still be looking to buy breakouts among top-rated stocks.
The AI stock shows a near-perfect 98 out of 99 IBD Composite Rating, according to IBD Stock Checkup, mainly due to a three-year earnings growth rate of 32% and huge price gains since October 2022.
The relative strength line is recovering after a dive in late May, but remains pretty far from its old highs. That's a key flaw to watch. Look for resurgent strength in the RS line to indicate confirmation of stock market leadership.
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Best Stocks To Watch
Three IBD 50 Growth Stocks To Watch picks from earlier this year are among the best stocks to watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Hilton | 215.79 | Flat base | |
| Booz Allen Hamilton | 164.43 | Flat base | |
| Palantir Technologies | 26.57 | Cup with handle |
Source: IBD Data As Of July 3, 2024
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