Jensen Huang Calls This Portfolio Name the 'AI OS for the Enterprise'
Management comments bring another layer of support for these six other holdings.
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William R. McDermott, Chairman & CEO at ServiceNow NOW gave the company's presentation at the Goldman Sachs Communicopia conference, and while AI was a key part of it, it was a great reminder of why we picked up NOW shares when we did. We continue to see ServiceNow well positioned for AI adoption as it continues to focus on removing friction from enterprise workflow.
McDermott said that the number one use case for GenAI is process automation and ServiceNow aims to be the AI platform for business transformation. McDermott shared that Nvidia NVDA CEO Jensen Huang refers to ServiceNow as the AI operating system for the enterprise. Helping support that claim, McDermott said ServiceNow had just released out-of-the-box GenAI for financial services, retail, telco, media, technology and the public sector. All of these industries now are getting GenAI use cases out of the box. This is part of ServiceNow looking to capture the 36% of the $3 trillion expected to be spent on AI by enterprises through 2027 that it addresses.
Our view on McDermott’s comments is they support the growing adoption of AI in the enterprise, which is bullish for Microsoft MSFT on a few levels, but also other cloud providers, such as Amazon AMZN, Alphabet GOOGL, and Meta META, but also Nvidia and Marvell MRVL.
We’ve commented before that if we could go back in time and load up even more on NOW shares than we did at the time, it would have been a smart move. Now we’re waiting for either a pullback in the stock or the more likely outcome that we’ll have to boost our $900 NOW price target. Better a small piece than no piece is our thinking. And to see enough potential upside to warrant committing fresh capital to NOW means seeing a target of at least $1,000. But even then that would be only 12% upside from current levels.
All of this leads us to think our next opportunity with NOW will likely be a combination of boosting our price target and picking the shares up on a pullback.
At the time of publication, TheStreet Pro Portfolio was long NVDA, NOW, MSFT, AMZN, GOOGL, META and MRVL.
