The analyst took a long position in ServiceNow (NOW) and plans to build out on dips for a long-term compounding position, believing SaaS companies like NOW and ZETA will benefit from AI integration and margin expansion.
SaaS companies are entrenched with high switching costs; AI integration will lead to margin expansion through cost savings and revenue increases; no credible CTO will risk offboarding ServiceNow for an AI replacement.
SaaS is alive. $NOW +23% since my post last week. AI is not replacing these names: - $PLTR - $MSFT - $NOW - $SHOP - $DDOG - $CRM - $SNOW - $APP - $MDB - $ZETA - @amitisinvesting Basis Points pod w/ CEO convinced me of this. (No position) Many of these companies are so entrenched in massive enterprises that the switching costs/risks are way too high. No credible CTO will risk offboarding a $NOW for a stitched together "AI" replacement. I believe that the more that SaaS companies utilise AI themselves, the greater their margin expansion will be: - Cost savings by reducing employee headcount bloat. - Revenue increases by integrating AI into their solutions e.g. Zeta/ServiceNow. Disclosure: I took positions in ServiceNow 22 mins after my original tweet lol. Plan is to build out on dips for a long term compounding position (hopefully).
| Horizon | Raw move | vs SPY |
|---|---|---|
| 1 day | +9.2% | +9.0% |
| 1 week | -9.6% | -7.1% |
| 1 month | -19.6% | -17.6% |
| 3 months | — | — |
| 6 months | — | — |