I Sold all my Apple and Bought ServiceNow. I Was a Year Late.

     My very last column was titled “Is it Time to Sell Apple?” The answer, it turns out, was yes. I have been getting really angsty about Apple, like Dwayne Hoover from Little Miss Sunshine, something I never thought I would become. I assumed Apple would be another Microsoft or Costco, companies I have held for five years without a second thought, but my Apple mentality has changed.

     This article is a referendum on my treatment of Apple stock and a brief analysis of my newest holding, ServiceNow.

     I was too emotional with Apple. One of the worst things you can be possessed with when investing is complacency, and Apple felt so secure, that I failed to properly assess some of its underlying failings. Primarily, I overvalued future income streams and the growth of current income streams. I covered this in the previous article in much more detail, but I never put much stock into the iPhone division’s growth, I thought Apple Intelligence would be impressive, and I thought the Apple Vision Pro would be better, even at its lowly state. And it is not like Apple will fail to grow its revenue, I just feel like all revenue growth is priced in to a degree I do not feel internally.

     Basically, what it came down to was that the market thought Apple’s revenue would grow at a rate I disagree with. Apple will be a successful company, and they might even outpace the S&P over the next five years, but I felt more confident in every other position I have, even Disney, and that is when I realized I needed to make a change. My entire investing philosophy boils down to believing 110% in my companies, and Apple just did not fit that criterion anymore, so I am switching to a different horse. I have welcomed ServiceNow to my ranks.

     It took me a while to understand what ServiceNow actually does because all the explanations use words that were equally confusing to me, so from the internet’s dumbing down, I will attempt to dumb down further. ServiceNow is what is called an enterprise software company, so they basically run software for companies to use. This is HR software, payroll software, and analytics. ServiceNow attempts to make all the backroom software more efficient, and to do that, they incorporate AI.

     ServiceNow is incredibly sticky, their revenue is ticking up 20% each year, they have an 80% gross margin, they are net income positive, and I really like Bill McDermott, their CEO. Listening to him speak is an experience, and he is always wearing those sick sunglasses, which I think he has to wear because of an eye problem.

     This company is crushing AI and automation right now, the future of the world, and their competition is minimal. While I am buying in at a very high price, I am not worried about the continued acceleration of the company, and I am extremely excited to buy on Monday.

     As for why I picked ServiceNow over some other fun companies: I knew I wanted to get into something like this, and I was initially leaning towards Salesforce, but I am worried AI will crush them, or at least, cap their growth. Intuit is a great company, but the IRS is rolling out a program in 12 pilot states to make filing taxes free, and while I want to get into cyber-defense, I do not feel good with CrowdStrike, and in general, there is too much competition in cyber defense.

     Goodbye Timmy Cook and your lame flag waving, and hello Bill McDermott, with your cool sunglasses