What Happened:
Shares of enterprise workflow software maker ServiceNow (NYSE:NOW) jumped 5% in the mid-day session after Nvidia delivered an exceptional quarter that topped analysts' estimates across key metrics. Most impressively, guidance for next quarter's revenue was over 50% higher than Consensus at the time. ServiceNow spent considerable time during its mid-May analyst day speaking of its investments and growing capabilities in AI. In mid may 2023, ServiceNow announced a partnership with Nvidia to improve its generative AI capabilities using large language models provided by the graphics chips maker.
What is the market telling us:
ServiceNow's shares are quite volatile and over the last year have had 18 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was eight days ago, when the stock gained 5.23% on the news that the company announced its first-ever share buyback program during its investor day session. The program enabled the purchase of up to $1.5 billion in shares of common stock. Management added that "given the current macro environment and our strong cash flow generation, we believe that using a portion of our free cash flow to manage dilution is a strategic use of capital. This program reflects our conviction in the trajectory of our business and our commitment to driving exceptional shareholder value."
ServiceNow is up 37.9% since the beginning of the year. Investors who bought $1,000 worth of ServiceNow's shares 5 years ago would now be looking at an investment worth $3,010.
Is now the time to buy ServiceNow? Access our full analysis of the earnings results here, it's free.