Forget the AI hype — hedge funds are moving past the chatbot phase and piling into a very specific category of AI play: agentic AI. These are the platforms that don’t just answer questions, they take action. They manage workflows, execute tasks, and run autonomously inside enterprise software. And the smart money is loading up.
ServiceNow (NOW) is at the top of the list. The company reported Q4 subscription revenue of $3.47 billion — up 21% year-over-year — with current remaining performance obligations climbing 25% to $12.85 billion. Its Now Assist AI product more than doubled net new annual contract value in the quarter. On January 20, ServiceNow expanded its partnership with OpenAI to power agentic AI experiences across enterprise workflows, giving customers access to frontier models built directly into a platform already running over 80 billion workflows annually. Stifel cut its price target to $135 (from $180) in early April citing federal spending headwinds, but maintained its Buy rating — meaning the pullback may be opportunity.
The broader agentic AI basket also includes names across the software stack where AI isn’t just a feature bolt-on, but the core architecture. Companies building workflow automation, voice agents, and autonomous IT orchestration are drawing outsized hedge fund attention because the revenue model is fundamentally stickier than pure LLM plays — enterprises don’t rip out their workflow systems. They expand them.
The practical trade here is straightforward: agentic AI stocks with durable enterprise revenue streams and expanding ACV metrics are the ones most likely to survive — and thrive — even in a broader tech rotation. With the S&P 500’s software sector (IGV) down roughly 30% year-to-date while semis (SMH) are up over 20%, the divergence is stark. If you believe AI spending is real and durable, the question isn’t whether to own this space — it’s whether you want to own the pipes or the platforms running on them. Right now, hedge funds are clearly betting on the platforms.
