Missed Out on Nvidia Stock? Buy This Spectacular Artificial Intelligence Stock Instead

Summary

This video explores ServiceNow as an alternative AI investment for those who feel they missed out on NVIDIA's stock surge. Highlighting ServiceNow's first-mover advantage in AI, significant revenue and cash flow growth, and robust remaining performance obligations, the video argues for its strong future revenue visibility. With an improving return on invested capital and a fair valuation, ServiceNow is positioned to benefit from the escalating demand for AI solutions, making it an attractive long-term investment in the growing AI market.

Takeaways

• 🚀 Nvidia's stock price has significantly increased from a low of $372 to $131 per share over the last 5 years, indicating strong performance.
• 🌟 The video suggests that while Nvidia is still a good investment, some investors may feel it's too late to buy and are looking for alternative AI investments.
• 📈 The AI stock recommended as an alternative to Nvidia in the video is ServiceNow, which has a first-mover advantage in AI technology and talent.
• 💹 ServiceNow has shown impressive revenue growth, jumping from under $2.5 billion in 2019 to $9.47 billion in trailing 12 months.
• 💰 The company's cash flow from operations has also increased significantly, from less than $1 billion in 2019 to $3.83 billion.
• 📊 ServiceNow's remaining performance obligations (RPO) are growing faster than current RPO, indicating strong future revenue visibility.
• 📈 The company's current RPO of $8.45 billion is up by 21% year-over-year, and total RPO of $17.7 billion is up by 26% year-over-year.
• 🔢 ServiceNow has a robust return on invested capital (ROIC) of 22.4%, which has improved significantly from less than 6% in early 2022.
• 📉 The demand for AI solutions for productivity enhancements is growing rapidly, positioning ServiceNow well in the market.
• 💼 The company is trading at a forward PE of 45.74, which is considered fairly valued given its revenue growth and operational improvements.
• 🔮 The video suggests holding ServiceNow stock for the long term to benefit from the growing AI market, expected to increase spending by over $1 trillion annually in the next decade.

Q & A

What has happened to Nvidia's stock price in the last 5 years?

Nvidia's stock price has significantly increased, rising from a low of $372 per share to $131 per share.

Why might some investors feel it's too late to buy Nvidia stock?

Some investors might feel it's too late to buy Nvidia stock due to its substantial increase in price over the last 5 years, which may make them believe they missed out on potential gains.

What is the alternative AI investment suggested in the video for those who feel they missed out on Nvidia?

The alternative AI investment suggested in the video is ServiceNow, a company with a strong focus on AI technology and talent.

What does ServiceNow's CEO say about the company's position in the AI market?

ServiceNow's CEO states that the company has a first-mover advantage in the AI market due to years of investment in AI technology and talent, and that their AI offerings are the fastest selling in the company's history.

How has ServiceNow's revenue grown over the years?

ServiceNow's trailing 12-month revenue has jumped to $9.47 billion, up from a little less than $2.5 billion in 2019.

What is the significance of the increase in ServiceNow's cash flow from operations?

The increase in cash flow from operations, from less than $1 billion in 2019 to $3.83 billion, indicates that ServiceNow is not only growing its revenue but also improving its profitability.

What are remaining performance obligations (RPO) and why are they important for ServiceNow?

Remaining performance obligations (RPO) are contracts signed with customers that will eventually turn into revenue. For ServiceNow, increasing RPO indicates strong future revenue growth as it provides visibility into the company's revenue prospects.

How has ServiceNow's return on invested capital (ROIC) improved over time?

ServiceNow's ROIC has improved significantly, from less than 6% in early 2022 to 22.4% in the most recent period, showing the company's effectiveness in generating profits from investor capital.

What does the demand for AI solutions indicate about ServiceNow's market position?

The growing demand for AI solutions for productivity enhancements, especially as labor costs increase, places ServiceNow in a favorable market position with a proven business model.

How is ServiceNow's current valuation assessed in the video?

ServiceNow is considered to be trading at a relatively fair valuation with a forward PE of 45.74, which is justified given the company's revenue growth, profitability improvements, and market prospects.

What is the potential growth of the AI market in the next decade as mentioned in the video?

The AI market is expected to increase by more than $1 trillion in total annual spending worldwide in the next decade.