Why ServiceNow Stock Is Soaring Today

Shares of ServiceNow Inc. (NYSE: NOW) 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.

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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.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.