ServiceNow is experiencing an increase in the number of Pro Plus deals and overall contract values.
PayPal’s AI-powered commerce strategy and strong profitability make it a compelling pick now.
Arista Networks has emerged as a dominant player in the AI-powered networking infrastructure space.
Wall Street has seen dramatic volatility in 2025, affected by high inflation across several major economies, escalating U.S.-China trade wars, and rising geopolitical tensions. While the U.S. equity market has somewhat stabilized, investors remain concerned about the Federal Reserve’s hawkish tone about future rate cuts and softening consumer demand.
However, this period of volatility can also prove exceptionally lucky for some investors — those who manage to take at least small bets on mispriced opportunities. Here’s why ServiceNow (NYSE: NOW), PayPal (NASDAQ: PYPL), and Arista Networks (NYSE: ANET) seem to fit the criteria of wealth-generating stocks for long-term investors.
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Shares of digital workflow automation player ServiceNow are down nearly 9.6% in 2025. This pullback can be an attractive entry point into the company, which is poised to benefit significantly from the ongoing artificial intelligence (AI)-powered transformation in the enterprise software space.
ServiceNow’s software offerings help automate and streamline various enterprise workflows across industry verticals. The company’s solutions continue to be in high demand, as evidenced by a 20% year-over-year jump in subscription revenue and a 22% year-over-year rise in the current portion of remaining performance obligations (cRPO, a metric to gauge the company’s revenue-earning potential in the next 12 months) in the recent quarter.
ServiceNow is also seeing solid traction for its AI offerings. The company’s Pro Plus deals (generative AI capabilities offered in the Now Assist suite) more than quadrupled year over year in the first quarter. The average annual contract value deal size also increased by one-third quarter over quarter in the first quarter, as enterprises increasingly opted for the company’s AI offerings. Furthermore, the acquisition of Moveworks and Logik.ai will further strengthen its agentic AI and enterprise search capabilities.
ServiceNow is trading at a forward P/E of 57.8, which is rich. However, considering its resilient business model, 48% free-cash-flow margin, and $10.9 billion in cash and investments, the stock seems a smart buy now, even at elevated levels.
Fintech giant PayPal’s stock is currently down nearly 30% from its recent high in December 2024. However, this share price drawdown seems an excellent entry opportunity for the company, which is evolving from a mere payments player to a commerce platform.
PayPal’s revenue grew by a modest 1% year over year to $7.8 billion in the first quarter of 2025. However, the company’s profit metrics were impressive thanks to effective cost management and operational efficiencies. Operating income was up 31% year over year to $1.5 billion, while generally accepted accounting principles (GAAP) earnings per share (EPS) rose 56% year over year to $1.29.
PayPal is seeing strong momentum across multiple business areas such as branded checkouts, Venmo mobile payment service, and buy now, pay later (BNPL). The company is also pushing aggressively into the AI-powered agentic commerce space and has launched the industry’s first remote MCP server enabling AI agent frameworks to integrate with PayPal APIs. This initiative will enable clients to integrate AI agents for payments, tracking, and invoices directly within AI applications.
PayPal also boasts a solid balance sheet with $15.8 billion in cash and $12.6 billion in debt. Despite the many pros, it is trading at a forward P/E of just 13.1, far lower than its five-year average of 30.6. Considering its many growth drivers and reasonable valuation, this stock seems an alluring pick now.
Arista Networks stock has also tanked over 31% from its recent high in January 2025. Yet this networking infrastructure player remains an attractive pick, considering the rapidly increasing demand for high-performance networking solutions required to power advanced cloud and AI applications.
A leader in data center networking, Arista Networks accounts for almost 45% of share of the high-speed Ethernet switch solutions (ports above 100 GB-per-second speeds) for data centers. Besides traditional networking hardware, the company also offers several AI-powered networking capabilities, such as cluster load balancing to optimize GPU communication and context-driven network observability through its DANZ monitoring fabric platform.
Arista Networks boasts an impressive lineup of clients, including Microsoft, Meta Platforms, Apple, and Oracle. These cloud and AI titans account for 48% of the company’s revenue. Despite ongoing economic uncertainties, these partnerships have played a critical role in strengthening the company’s business.
It is indisputable that the company also faces several challenges, including competitive pressures, overreliance on a few large clients, and uncertainties arising from escalating tariff wars. However, with the company trading at forward earnings ratio of 30.9, lower than its five-year average of 39.1, this stock seems a good pick now.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Arista Networks, Meta Platforms, Microsoft, Oracle, PayPal, and ServiceNow. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, long January 2027 $42.50 calls on PayPal, short January 2026 $405 calls on Microsoft, and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.
3 Growth Stocks With Incredible Upside Potential was originally published by The Motley Fool
