#1 Unstoppable Artificial Intelligence (AI) Stock to Buy Hand Over Fist in 2024

Artificial intelligence (AI) is currently captivating the investment world. In addition to the “Magnificent Seven” stocks, investors are looking for other opportunities that can deliver similarly lucrative returns. But with so many tech executives touting the term “AI” on earnings calls or in media interviews, it can be difficult to discern which companies are actually emerging as leaders in their field.

Service Now (now 1.34%) It is a lesser-known name among AI companies. As a company specializing in information technology (IT) service automation solutions, it is quietly building a leading AI infrastructure. Analyzing the stock compared to its peers shows that now is a good time to buy the stock.

Leading the digital transformation revolution

ServiceNow is led by Bill McDermott, previously CEO of the enterprise software provider. sap. Since taking over at ServiceNow in 2019, McDermott has consistently used a specific phrase to describe the company’s disruptive agenda: digital transformation. But what exactly does that mean?

Businesses are relying on more data than ever to make informed and effective decisions. Large companies also tend to use a combination of different software tools and platforms to store their data. Often these systems cannot easily communicate with each other, leaving decision makers in difficult situations.

ServiceNow helps companies digitize their operations and connect their data.

Image source: Getty Images.

ServiceNow is hosting a sales masterclass.

The chart below shows how ServiceNow has continued to increase the number of customers paying at least $1 million in annual contracts. Additionally, those same customers are spending more with ServiceNow each year, which means they love the ServiceNow suite of products.

Image source: ServiceNow.

One of the ways ServiceNow has been able to achieve this growth is through newly developed AI-based solutions. For example, during the fourth quarter, ServiceNow’s generative AI products drove the largest net new annual contract value contribution among new products. The company boasts global accounting firm EY and a leader in payments. Visa These are notable customers of AI tools.

Can I buy ServiceNow stock now?

AI has a variety of applications. It is important to analyze IT spending trends as they relate to ServiceNow. On the company’s fourth-quarter earnings call in late January, McDermott said:

Gartner Technology spending is estimated at $5 trillion in 2024, and is expected to increase to $6.5 trillion by 2027. That means spending will rise by another $1 trillion in just two years, accelerating what took more than a decade to reach $5 trillion. By 2024, IT services will be larger than telecommunications services for the first time in a decade. Gartner predicts that by 2027, nearly all growth in global IT spending will come from software and IT services.

What McDermott emphasizes is that while overall technology spending is expected to increase, software and IT services in particular are expected to be major beneficiaries in the near future. From another perspective, ServiceNow’s best days may be ahead as it continues to grow enterprise customers at a healthy pace.

With a price-to-sales ratio of 18, ServiceNow stock trades in the middle range among leading enterprise software developers specializing in workplace automation services.

PS ratio data from NOW YCharts.

ServiceNow may be an undervalued growth stock that has been overshadowed by its larger competitors. Make no mistake. McDermott and his team are now laying the groundwork at the intersection of generative AI and IT software to ensure ServiceNow can benefit from the tailwinds of increased IT spending in the coming years.

To me, ServiceNow represents a unique opportunity in the AI ​​landscape. While the company may not attract as much attention as other leading software providers, trends in its customer base and overall developments in its overall target market combine to create an attractive investment opportunity.