Shares of ServiceNow Inc (NOW -1.31%) are surging on Tuesday. The company's stock gained 4.5% as of 2:50 p.m. ET and was up as much as 5.6% earlier in the day. The rise comes as the S&P 500 is up 0.2% and the Nasdaq Composite is up 1%.
The artificial intelligence (AI)-driven cloud computing and automation provider announced a major acquisition to bolster its AI capabilities.
NYSE: NOW
Key Data Points
Agents are coming
ServiceNow announced it would acquire Moveworks, a business automation company for $2.85 billion in cash and stock. The deal aims to enhance ServiceNow's own automation offerings and help the company compete in agentic AI -- AI that can perform tasks with some level of autonomy.
Moveworks' sophisticated AI agent technology, integrated into ServiceNow's platform, will allow the company to offer a universal AI assistant that is designed to boost employee engagement by automating routine tasks and providing rapid responses to queries.
The transaction, expected to conclude in the latter half of 2025, is part of ServiceNow's broader strategy to expand its AI offerings and better compete in the market.
Bucking the market trend
While recession fears and valuation concerns have dragged down many tech stocks, investors appear to view the deal as enough of a positive long-term growth catalyst.
ServiceNow remains pricey, however, with a price-to-earnings (P/E) ratio north of 100. Still, much of its competition carries similar multiples, and ServiceNow has a clear path to grow its earnings, especially after this deal.
