2 Reasons To Buy ServiceNow Stock After Its $2.9 Billion Moveworks Deal

ServiceNow’s Stock Performance and Strategic Moves

ServiceNow’s stock experienced a decline of 8.3% in the week ending March 12, 2023, as reported by Google Finance. However, the company saw a rebound of approximately 7.3% following its March 10 announcement of acquiring Moveworks, a Mountain View-based AI startup, for $2.85 billion. This acquisition highlights ServiceNow’s strategic expansion into agentic AI, aiming to enhance its product offerings and market position.

Factors Influencing ServiceNow’s Future Growth

The future trajectory of ServiceNow’s stock will largely depend on the company’s ability to exceed expectations and potentially raise its guidance during its Q1 2025 earnings report. Two key factors could bolster its performance:

1. Rapid Growth of Agentic AI Services: The increasing adoption of agentic AI solutions is expected to provide an unexpected revenue boost.
2. Weaker Dollar Impact: A decline in the U.S. dollar could mitigate foreign exchange headwinds that previously led to a lowered subscription revenue forecast for 2025.

Moveworks Acquisition: Enhancing ServiceNow’s Capabilities

Moveworks, with its 500 employees and impressive growth, having attracted five million users in just 18 months, aligns well with ServiceNow’s strategic goals. ServiceNow President and CFO, Gina Mastantuono, emphasized the synergy, noting that 250 overlapping customers could facilitate smoother integration. The acquisition aims to leverage Moveworks’ AI-driven employee support platform to bolster ServiceNow’s ProPlus service, enhancing task automation and service delivery.

Strategic Integration and Revenue Potential

Moveworks’ integration into ServiceNow’s ecosystem is expected to elevate its agentic AI offerings, potentially adding significant revenue. With Moveworks generating $100 million in ARR in 2024, the acquisition is poised to contribute meaningfully to ServiceNow’s growth. Moreover, the scalability of Moveworks’ platform across ServiceNow’s 8,500 customers presents a substantial revenue opportunity, potentially adding $1.6 billion in ARR if widely adopted.

Economic Uncertainty and Analyst Insights

Economic uncertainty in the U.S., marked by fluctuating tariffs and government job cuts, presents both challenges and opportunities. A weaker dollar could improve ServiceNow’s revenue outlook, offsetting previous forex-related declines. Analysts are divided on the acquisition, with some praising the competitive edge it brings against rivals like Salesforce, while others caution about integration complexities and potential workflow disruptions.

Conclusion and Future Outlook

In summary, ServiceNow’s strategic acquisition of Moveworks underscores its commitment to innovation and growth in the agentic AI space. While economic uncertainties persist, the potential for revenue growth and market leadership positions ServiceNow favorably. The company’s focus on organic growth, coupled with strategic acquisitions, highlights its proactive approach to staying ahead in a competitive landscape. If ServiceNow can successfully integrate Moveworks and leverage its AI capabilities, it is well-positioned to exceed expectations and drive stock performance.