QQQ   417.07 (+0.58%)
AAPL   165.59 (+0.36%)
MSFT   399.06 (-0.02%)
META   480.80 (-0.06%)
GOOGL   156.22 (+1.38%)
AMZN   175.62 (+0.57%)
TSLA   142.65 (-2.99%)
NVDA   788.18 (+3.44%)
AMD   147.65 (+0.69%)
NIO   3.93 (+3.42%)
BABA   70.19 (+1.62%)
T   16.21 (-1.82%)
F   12.77 (+5.19%)
MU   108.53 (+1.65%)
GE   150.32 (+1.53%)
CGC   7.91 (-0.25%)
DIS   112.33 (-0.25%)
AMC   3.45 (+9.18%)
PFE   26.27 (+1.04%)
PYPL   62.85 (+0.87%)
XOM   120.61 (+0.61%)
QQQ   417.07 (+0.58%)
AAPL   165.59 (+0.36%)
MSFT   399.06 (-0.02%)
META   480.80 (-0.06%)
GOOGL   156.22 (+1.38%)
AMZN   175.62 (+0.57%)
TSLA   142.65 (-2.99%)
NVDA   788.18 (+3.44%)
AMD   147.65 (+0.69%)
NIO   3.93 (+3.42%)
BABA   70.19 (+1.62%)
T   16.21 (-1.82%)
F   12.77 (+5.19%)
MU   108.53 (+1.65%)
GE   150.32 (+1.53%)
CGC   7.91 (-0.25%)
DIS   112.33 (-0.25%)
AMC   3.45 (+9.18%)
PFE   26.27 (+1.04%)
PYPL   62.85 (+0.87%)
XOM   120.61 (+0.61%)
QQQ   417.07 (+0.58%)
AAPL   165.59 (+0.36%)
MSFT   399.06 (-0.02%)
META   480.80 (-0.06%)
GOOGL   156.22 (+1.38%)
AMZN   175.62 (+0.57%)
TSLA   142.65 (-2.99%)
NVDA   788.18 (+3.44%)
AMD   147.65 (+0.69%)
NIO   3.93 (+3.42%)
BABA   70.19 (+1.62%)
T   16.21 (-1.82%)
F   12.77 (+5.19%)
MU   108.53 (+1.65%)
GE   150.32 (+1.53%)
CGC   7.91 (-0.25%)
DIS   112.33 (-0.25%)
AMC   3.45 (+9.18%)
PFE   26.27 (+1.04%)
PYPL   62.85 (+0.87%)
XOM   120.61 (+0.61%)
QQQ   417.07 (+0.58%)
AAPL   165.59 (+0.36%)
MSFT   399.06 (-0.02%)
META   480.80 (-0.06%)
GOOGL   156.22 (+1.38%)
AMZN   175.62 (+0.57%)
TSLA   142.65 (-2.99%)
NVDA   788.18 (+3.44%)
AMD   147.65 (+0.69%)
NIO   3.93 (+3.42%)
BABA   70.19 (+1.62%)
T   16.21 (-1.82%)
F   12.77 (+5.19%)
MU   108.53 (+1.65%)
GE   150.32 (+1.53%)
CGC   7.91 (-0.25%)
DIS   112.33 (-0.25%)
AMC   3.45 (+9.18%)
PFE   26.27 (+1.04%)
PYPL   62.85 (+0.87%)
XOM   120.61 (+0.61%)

A bullish storm is brewing for cloud stocks 

Cloud stock price

Key Points

  • Service Now results point to solid results from other cloud service names. 
  • Stocks like Datadog are beaten down despite an expectation for solid growth in 2024. 
  • Snowflake serves both sides of the AI industry, providing data management services embedded with AI .
  • 5 stocks we like better than ServiceNow

Results from ServiceNow NASDAQ: NOW bode well for cloud services stocks. The company posted results that sparked a round of surprisingly bullish chatter from analysts that points to continued strength in this and other cloud services names. 

Analysts viewed the ServiceNow results as remarkably strong, defying expectations on broad demand, with significant improvement in the outlook all because of AI. AI is expected to and is already proving capable of generating substantial cost savings for businesses; it will only gain momentum and drive business in the cloud. Because many of these stocks are beaten down on depressed expectations, there is a significant opportunity for them to outperform expectations and reinvigorate their stock prices. 

ServiceNow confirms reversal, leads cloud stocks higher 

ServiceNow had a strong quarter, with net revenues up 25% compared to last year. The $2.92 billion in revenue beat consensus by about 100 basis points on strength in government spending and AI, with revenue in that segment up 75%. Total subscription revenue is up 27%, outpacing the consensus by several hundred basis points, with the remaining performance obligation up an equal amount.

Guidance is what has ServiceNow stock moving higher. The company raised its guidance for the year, and it may be cautious. A new partnership with Deloitte highlights the growth potential; Deloitte will embed ServiceNow generative AI into its OperateEdge platform, and other large clients are doing likewise. Growth of large clients topped 50% for the quarter, and the penetration is deepening to provide a dual tailwind for growth. 

Analysts rate this stock a Moderate Buy and have been raising their price targets all year. The Q3 release sparked another round of revisions, with the consensus target up 3% compared to last quarter and 12% compared to last year but in alignment with recent price action. The takeaway is that recent price targets have the stock trading in the $650 to $700 range, which is 7% to 15% above current action. 

Service Now stock price

Datadog in the doghouse; market ready to rebound

Datadog NASDAQ: DDOG shares sank more than 20% following the Q2 release on overreacting to mixed news. The Q2 results were better than expected but came with mixed guidance that included modestly weak top-line expectations but better-than-expected earnings. The takeaway is that revenue weakness will be offset by earnings strength, and both targets may be cautious; Datadog raised guidance significantly in Q1, the Q2 reduction is a minor give-back, and outperformance is typical. Regarding next year, analysts project 25% top-line growth and a wider margin. 

The analysts are expecting good things in Q3 2023 despite the guidance cut. They have only raised their revenue and earnings targets since the Q2 release and have consensus pegged near the top of the range. They’ve also been lowering their price targets for the stock, putting it on the Most Downgraded stock list. This activity has the market trading at a critical level and well positioned for a rebound, given a solid report. Despite the downward revisions, analysts see this market advancing more than 20%. 

Datadog stock price

Snowflake: a blizzard of opportunity in AI 

Snowflake NASDAQ: SNOW is another cloud stock whose share price is struggling to gain traction despite the massive opportunity in AI. The company’s growth slowed in 2023, helping to cap share price gains, but an acceleration of business is expected next year that will bring significant earnings leverage. The growth driver for this company is the need for data and data management, an absolute requirement for creating, training, deploying, and utilizing AI. 

The company is embedding AI services across its platform to help businesses manage and gain insight from their data. To that end, Snowflake acquired several AI-oriented businesses to help with searching at scale and applying AI models. 

Snowflake earnings are expected to grow by 50% in 2024, and the bar is likely low. Analysts have been lowering their targets despite persistent high-double-digit growth in large clients and a remarkable 142% net retention rate. This company is growing its client base and deepening penetration in what many see as the first innings of the AI revolution, so outperformance is more likely than not. As it is, revenue growth is estimated to slow to 28% from 35% in Q3 2023. 

Snowflake stock price

Should you invest $1,000 in ServiceNow right now?

Before you consider ServiceNow, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and ServiceNow wasn't on the list.

While ServiceNow currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Metaverse Stocks And Why You Can't Ignore Them Cover

Thinking about investing in Meta, Roblox, or Unity? Click the link to learn what streetwise investors need to know about the metaverse and public markets before making an investment.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Snowflake (SNOW)
4.4444 of 5 stars
$145.53+0.1%N/A-57.07Moderate Buy$202.00
Datadog (DDOG)
3.5217 of 5 stars
$119.95-0.1%N/A999.58Moderate Buy$130.52
ServiceNow (NOW)
4.5389 of 5 stars
$714.39+0.1%N/A84.95Moderate Buy$780.37
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


Featured Articles and Offers

5 Hottest CEO Stock Purchases

5 Hottest CEO Stock Purchases

No insider is more significant than the CEO. This is a list of the five most significant CEO purchases in Q1 2024 based on dollar volume.

Search Headlines: