Is it a golden opportunity to buy ServiceNow stock as a rare pattern nears?

ServiceNow stock has remained in a strong bull run this month, moving to its highest level since January this year. NOW has soared to $138, up by 70% from its lowest level this year. This rally may continue as demand for its services continues and as a golden cross pattern nears.

ServiceNow stock is set to rebound amid solid fundamentals

NOW stock has slumped in the past few months, moving from a high of $240 in January last year to a low of $81.23. This sell-off happened as more companies embraced AI tools like Claude’s Cowork and ChatGPT’s projects.

The view among investors is that some of these tools would help companies automate some of the tasks that they use ServiceNow for. At the same time, investors pointed to its large acquisitions, including Armis and Moveworks. 

It bought Armis in a $7.75 billion deal and Moveworks for $2.85 billion. These acquisitions sent a message that the company was focusing on growth through acquisitions.

ServiceNow and its proponents have argued that its business will benefit from the AI boom. AI is helping it reduce costs, and improve its offerings. For example, using ServiceNow’s AI tools, clients can improve the hiring process. Also, its AI tools can help companies in its service desks.

The most recent results showed that ServiceNow’s business was doing well, with its revenue jumped by 24% in the second quarter to $3.9 billion, with Armis contributing to this growth. Its remaining performance obligations (RPO) rose by 21% to $13.2 billion. 

Most importantly, its recently-launched ServiceNow AI crossed $1 billion in annual contract value, while its contract renewal rate rose to 98% from Q1’s 97%. This means that its business is not losing customers during the AI boom.

The revenue growth is expected to continue growing in the coming months. For example, analysts predict that its third-quarter revenue rose by 20% to $4.1 billion. Its earnings-per-share is expected to move from 0.96 to $1.03. The annual revenue is expected to jump from $13 billion last year to $16.2 billion, with Armis and Moveworks contributing to the growth.

ServiceNow stock has continued rising because of the recent earnings by other software companies that have demonstrated that there is demand for their services. This includes companies like Figma, Workday, and Salesforce.

NOW stock technical analysis: golden cross nears

ServiceNow stock chart | Source: TradingView

The daily chart shows that the ServiceNow stock has rebounded in the past few months, moving from a low of $81.2 in April to the current $138.4. It is attempting to move above the crucial resistance at $138.4, its highest level on June 1 this year. 

The stock is about to form a golden cross pattern that forms when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. The spread between these two averages has continued narrowing in the past few days. 

The Relative Strength Index (RSI) and the MACD indicators have continued rising. As such, there is a possibility that the stock will continue rising, potentially to the next key resistance level of $150. A move above that level may push it to the July 2025 high of $210.

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