12 Best Enterprise Software Stocks to Buy Now

2. ServiceNow Inc. (NYSE:NOW)

Number of Hedge Fund Holders: 110

ServiceNow Inc. (NYSE:NOW) provides cloud-based solutions for digital workflows globally. It operates the Now platform, which is an AI platform for digital transformation ML, robotic process automation, and analytics. It also provides asset management, integrated risk management, IT service management, and Operational Technology management. It offers HR, legal, and workplace service delivery products.

The company’s Now Platform is actively integrating AI which drives its adoption. The company is also seeing higher adoption of its AI-powered Pro Plus offerings. In Q4 2024, ServiceNow Inc.’s (NYSE:NOW) AI-related deals were up 150% sequentially. The company focuses on high-value clients and closed 170 deals in Q4 that exceeded $1 million in net new ACV. 19 of these deals were over $5 million and 3 were over $20 million. 2 additional customers also crossed $100 million in total ACV.

The company is developing AI agents to automate complex enterprise processes. These agents both deliver efficiency and drive customer value. For instance, one multinational customer observed a 45% reduction in live chat after it implemented ServiceNow Inc.’s (NYSE:NOW) Now Assist. On January 30, Baird analyst Rob Oliver reaffirmed a Buy rating on the company with a $1200 price target due to its focus on integrating GenAI products. The company prioritizes adoption over immediate revenue generation.

Sands Capital Select Growth Fund stated the following regarding ServiceNow Inc. (NYSE:NOW) in its Q4 2024 investor letter, following its strong growth and financials:

“ServiceNow, Inc. (NYSE:NOW) shares advanced following its third-quarter business results, which revealed impressive execution at scale across the company’s product suite.

The business exceeded both top- and bottom-line expectations, with subscription revenue growing 22 percent in constant currency and adjusted operating margins expanding to 31 percent. Momentum continues in its Pro+ generative artificial intelligence (AI) product, which we estimate is generating nearly $100 million—a roughly 200 percent increase relative to the prior quarter. Outside of AI, momentum was broad across products and customer segments.

Over our five-year horizon, we expect ServiceNow to sustain over 20 percent top-line growth with incremental upside from continued progress in its AI-enabled products. We view its durable growth fueled by a broad product suite, paired with AI-related upside, as favorable relative to peers that trade at comparable valuations with weaker platform opportunities.”