Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

5. ServiceNow, Inc. (NYSE:NOW)

Consensus Long-Term EPS Growth Estimate: 31%

Number of Hedge Fund Holders: 97

ServiceNow, Inc. (NYSE:NOW) is a software-as-a-service (SaaS) company that enables businesses to automate their functions and manage human resources. Since it’s a SaaS company, the firm’s narrative is driven by its ability to land large deals and generate stable subscription revenue. ServiceNow, Inc. (NYSE:NOW)’s shares are up 46% year to date, and before October start, the stock had gained 26%. The pre-October modest performance is driven by sluggish non-AI IT spending due to high rates constraining budgets. However, ServiceNow, Inc. (NYSE:NOW) has started to play on the front foot for AI, as it plans to start providing AI agents to businesses to automate their operations and reduce costs. The shares have gained 10.8% since the firm’s third-quarter earnings which saw its fourth-quarter subscription revenue guidance of $2.875 billion – $2.880 billion beat analyst estimates of $2.85 billion. ServiceNow, Inc. (NYSE:NOW)’s ability to deliver and surpass these estimates coupled with a penetration of the AI assistant market could create additional tailwinds.

Polen Capital mentioned ServiceNow, Inc. (NYSE:NOW) in its Q3 2024 investor letter. Here is what the fund said:

“In the third quarter, the top relative contributors to the Portfolio’s performance were NVIDIA (not owned), Shopify, and ServiceNow, Inc. (NYSE:NOW). ServiceNow reported better-than-expected sales and bookings during the quarter, with subscription sales up +23%. Encouragingly, GenAI offerings within its product suite, rolled out in late 2023, already appear to be an incremental driver of this growth. In our view, ServiceNow is a great example of a consistent grower, with a strong moat serving diverse and growing end markets with expanding margin opportunities over time.”