Why ServiceNow Stock Jumped Today
Key Points
The tech stock is rebounding slightly after months of declines.
Long-term investors are viewing the recent drop as a potential buying opportunity today.
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Shares of ServiceNow (NYSE: NOW) were up today as investors regained some confidence in the workflow automation company, rebounding after fears of AI disruption had haunted many software stocks.
The rising optimism about ServiceNow helped the stock jump 5.9% as of 12:58 p.m. ET today.
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Shifting sentiment
ServiceNow's stock price is down 44% over the past six months, as the company has fallen victim to the so-called "SaaSpocalypse" in which software stocks are being rapidly sold off on fears that artificial intelligence will replace core software programs and platforms.
Concerns about a prolonged war in Iran -- and the economic impact of rising oil prices and higher inflation -- have added to the downward pressure on many technology stocks.
ServiceNow's share price rise today is likely the result of some investors believing the shares are oversold and buying the stock at a relevant discount. Adding to today's optimism, Federal Reserve Chairman Jerome Powell suggested that the inflation outlook isn't worrying yet and that an interest rate hike may not be necessary, despite rising energy costs.
Investors have generally been concerned that a prolonged war in Iran could accelerate inflation, and some economists have said the conflict raises the risk of U.S. recession.
More uncertainty could be ahead, but don't panic
With many investors still trying to figure out how AI will impact tech companies, it's likely ServiceNow's stock will face more volatility in the short-term. But that's not a reason to panic.
The rapid sell-off in ServiceNow's stock has allowed potential investors to buy shares of a fast-growing, highly profitable tech company at a discount.
Should you buy stock in ServiceNow right now?
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.
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