10 Best Information Technology Services Stocks to Buy

3. ServiceNow Inc. (NYSE:NOW)

Number of Hedge Fund Holders: 90

ServiceNow Inc. (NYSE:NOW) is a leading player in the IT Service Management sector, providing solutions that help companies manage their digital workflows. ServiceNow delivered a strong first quarter in 2024, surpassing expectations in all key growth and profitability metrics. Subscription revenue increased by 25% year-over-year to $2.52 billion, while total revenue grew by 24% year-over-year, reaching $2.60 billion.

In May, Oppenheimer reaffirmed its Outperform rating and $825.00 price target for ServiceNow Inc. (NYSE:NOW) following the company’s annual Knowledge conference. Insights from a survey of 48 customers indicated a positive outlook for ServiceNow Inc. (NYSE:NOW)’s future, emphasizing its leadership in workflow automation and a broad product portfolio that attracts increased spending from its existing customers. Despite the favorable sentiment, Oppenheimer noted some caution regarding the long-term impact of the company’s Pro+ adoption plans on pricing.

Of the 920 hedge funds tracked by Insider Monkey, ServiceNow Inc. (NYSE:NOW) was held by 90 funds at the end of Q1 2024, making it one of the best information technology services stocks to buy now.

Here’s what Lakehouse Capital said about ServiceNow Inc. (NYSE:NOW) in its Q1 2024 investor letter:

“US-based software company,ServiceNow, Inc. (NYSE:NOW), provided another strong result, continuing its long and consistent track record of 20%-plus revenue growth combined with healthy profitability. Subscription revenues grew 25% year-on-year to $2.5 billion and free cash flow grew 47% year-on-year to $1.2 billion. The company’s core operating metrics were also impressive with remaining performance obligations growing 26% year-on-year to $17.7 billion (i.e. roughly 2x 2023 revenue) and renewal rates holding steady at 98%. Performance was evenly spread across segments, products, and geographies, with notable strength in the US federal government. The company now boasts 1,933 customers generating in excess of $1 million in Annual Contract Value (ACV), which is pleasing to see as it implies multiple solutions are involved and that the company’s platform model is increasingly resonating with customers. In our view, ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”