Jim Cramer Thinks AI Revolution Can Boost These 5 Stocks

2. ServiceNow Inc (NYSE:NOW)

Number of Hedge Fund Investors: 91

ServiceNow could benefit from the AI revolution because companies need software infrastructure to process and parse the massive data created by generative AI applications, according to Jim Cramer.

In December 2023, Cramer said that “a lot of people” feel that ServiceNow Inc (NYSE:NOW) has become the “barometer” of the broader AI industry. Cramer said the company has done an “amazing job.”

“Loving ServiceNow into the q because, among other things, it’s close to NVDA—Melius.”

Baron Fifth Avenue Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its fourth quarter 2023 investor letter:

“ServiceNow, Inc. (NYSE:NOW) offers cloud-based solutions that improve workflow efficiency through automation and digitalization. The stock rose 26.4% in the fourth quarter, finishing the year up 82.0%. Stock appreciation was supported by strong quarterly results above expectations with 24.5% year-over-year subscription revenue growth in constant currency and 30% non-GAAP operating margins despite ongoing macro complexities. In addition, the stock benefited from growing investor expectations that the company would benefit from the integration of GenAI technology into its products, and a rise in software stocks more broadly. Management noted that key business drivers included strong traction with government customers, improving momentum with new customers, and budget consolidation into platforms like ServiceNow. In addition, the company launched its GenAI-supported product line, sold under a new higher-priced Pro Plus sku, at the end of the quarter and has already signed on multiple customers with hundreds more in the pipeline. The new product line should generate material efficiencies for customers as it improves their ability to automate and digitize, and hence we expect broader adoption of the Pro Plus sku, creating an additional growth engine for ServiceNow, supporting the company’s long duration of growth.”