The Rise of Agentic AI and Its Impact on SaaS Stocks
Agentic AI is rapidly emerging as a transformative force in the technology landscape, and several software-as-a-service (SaaS) companies are positioning themselves to lead this charge. Among them, ServiceNow and Salesforce stand out for their strategic moves and potential to capitalize on this growing trend.
ServiceNow: A Central Nervous System for Organizations
ServiceNow has established itself as a critical player in the IT infrastructure space. While companies like Nvidia provide the backbone of AI infrastructure, ServiceNow acts as the central nervous system for organizations, monitoring their entire software stacks and deeply integrating with their data and workflows. This integration makes it an essential system that is unlikely to be disrupted by AI. Instead, it is expected to become a key component in the AI evolution that organizations are beginning to adopt.
The company has experienced significant growth driven by AI, with AI commitments projected to reach $1.5 billion this year—an increase of 50% from its previous guidance. This indicates a rapid adoption of its AI offerings. Additionally, ServiceNow's shift to a hybrid pricing model has yielded early benefits, with 50% of its new business now coming from non-seat-based pricing, including tokens and connectors.
ServiceNow also has a major opportunity with its AI Control Tower, a new agentic AI orchestration platform. As AI agents begin to operate within corporate ecosystems, they require strict guardrails, governance, and continuous monitoring. ServiceNow's system is designed to provide exactly that, making it well-positioned to lead in this space.
Salesforce: Building a Strong Foundation for AI Agents
Another SaaS company poised for success in the agentic AI space is Salesforce. The company has made several under-the-radar moves to transform its platform into an ideal environment for launching AI agents. One such move is its Data 360 product, which utilizes zero-copy technology to extract data from data warehouses like Snowflake and cloud computing providers without the cost or expense of transferring it.
Additionally, Salesforce's acquisition of Informatica provided it with the tools to clean, organize, and govern this data. Together, these developments make Salesforce an essential master of records for AI agents, setting the stage for future growth.
While Salesforce's Agentforce offering has shown solid growth, the company's overall size remains small, and it is not yet significantly impacting the market. However, as agentic AI gains momentum, Salesforce is expected to become a more substantial driver of growth in the long term.
Evaluating Investment Opportunities
Before considering an investment in ServiceNow, it's important to weigh various factors. For instance, the Motley Fool Stock Advisor analyst team recently identified what they believe are the 10 best stocks for investors to buy now—but ServiceNow was not among them. The selected stocks have the potential to deliver substantial returns in the coming years.
For example, consider the case of Netflix, which appeared on the list on December 17, 2004. If an investor had invested $1,000 at the time of the recommendation, they would have seen their investment grow to $439,038. Similarly, Nvidia's inclusion on the list on April 15, 2005, would have turned a $1,000 investment into $1,277,804.
Stock Advisor has consistently outperformed the market, with an average return of 942% compared to 206% for the S&P 500. This track record highlights the potential value of following expert recommendations.
Investors interested in the latest top 10 list can access it through Stock Advisor, joining a community of individual investors who share insights and strategies.
Conclusion
As agentic AI continues to gain traction, companies like ServiceNow and Salesforce are well-positioned to benefit from this trend. While ServiceNow offers a robust platform for AI orchestration, Salesforce is building a strong foundation for AI agents through strategic acquisitions and innovative products. Both companies present compelling opportunities for investors looking to capitalize on the evolving AI landscape.
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