Key Highlights
- NOW shares gained approximately 6% Thursday following CEO William McDermott’s remarks that AI enhances the value proposition of software companies
- The company unveiled two AI-driven solutions at its Government Forum: EmployeeWorks and Autonomous Workforce
- NOW Assist ACV currently stands at $600 million with projections to reach $1 billion by 2026
- Citizens maintained a Market Outperform rating alongside a $260 price target; analyst consensus remains Strong Buy with 30 Buy ratings
- Shares remain 43% below their 52-week peak while posting an 11.5% gain over the previous week
ServiceNow (NOW) experienced a sharp 6% rally Thursday after CEO William McDermott addressed investor concerns about artificial intelligence’s impact on the software industry. His remarks came during a Morgan Stanley investor conference and triggered immediate market reaction.
“If you have a great system of record, AI is actually making your intrinsic value higher because the data that’s in those systems is very important,” McDermott said.
Recent weeks have brought mounting pressure on software companies like Salesforce (CRM) and Microsoft (MSFT), driven by worries that artificial intelligence might diminish the relevance of enterprise software platforms. McDermott’s perspective provided reassurance that helped lift sentiment across the sector.
NOW gained more than 1% during Friday’s pre-market trading, with fellow software stocks following suit.
Government-Focused AI Solutions Debut
ServiceNow took advantage of the same day to host its annual Government Forum, where it ServiceNow introduced two fresh AI-powered offerings.
EmployeeWorks represents the first product, merging Moveworks’ conversational AI capabilities and enterprise search functionality with ServiceNow’s Employee Center platform. The solution serves as an AI-powered gateway for government workforce operations.
Autonomous Workforce, the second offering, delivers AI specialists capable of functioning within Government Community Cloud (GCC) and National Security Cloud (NSC) infrastructure. These agents align with the stringent governance standards required by federal organizations.
ServiceNow’s Moveworks platform secured FedRAMP Moderate Authorization, enabling federal agencies to implement the solution while meeting security compliance standards.
According to the company, its Level 1 Service Desk AI Specialist handles IT support tickets 99% faster compared to human agents.
Analyst Community Maintains Positive Outlook
Citizens reaffirmed a Market Outperform rating on NOW accompanied by a $260 price target. Current trading levels around $120 place the stock 43% beneath its 52-week peak of $211.48.
The firm highlighted NOW’s advantageous position in the agentic AI landscape, emphasizing its customer base, technical architecture, and AI Control Tower solution as competitive advantages.
NOW Assist ACV has reached $600 million with expectations to achieve $1 billion before 2026 concludes.
Citizens also referenced the upcoming Armis acquisition, scheduled to finalize during the first half of 2026. CEO McDermott has identified the company’s total addressable market at over $600 billion.
ServiceNow maintains gross profit margins of 77.5%, with combined 2026 revenue growth and free cash flow margin projected at 57%, an increase from 55% in 2025. Twenty-eight analysts have elevated their earnings forecasts ahead of the upcoming earnings report.
The Street’s consensus rating stands at Strong Buy for NOW — comprising 30 Buy ratings, two Hold ratings, and one Sell rating. The mean price target of $191.20 suggests approximately 59% upside potential from present levels.
In a notable development, CEO McDermott along with other executive team members terminated their trading plans, signaling management’s confidence in the stock’s current valuation.
ServiceNow has also named Danielle Fontaine as its new chief accounting officer, succeeding Kevin McBride, who transitions into an EVP position.
