TLDR
- NOW stock rose ~6% Thursday after CEO William McDermott said AI increases the value of software companies, not hurts them
- ServiceNow launched two new AI-powered products at its annual Government Forum: EmployeeWorks and Autonomous Workforce
- NOW Assist ACV sits at $600 million and is on track to hit $1 billion in 2026
- Citizens reiterated a Market Outperform rating with a $260 price target; Wall Street holds a Strong Buy consensus (30 Buys)
- The stock is down 43% from its 52-week high but gained 11.5% over the past week
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ServiceNow (NOW) jumped around 6% on Thursday after CEO William McDermott pushed back on fears that AI could hurt software companies. He made those comments at a Morgan Stanley investor conference, and the market responded quickly.
ServiceNow, Inc., NOW
“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.
Software stocks including Salesforce (CRM) and Microsoft (MSFT) have faced pressure lately over concerns that AI could make enterprise software less relevant. McDermott’s comments helped ease some of that anxiety across the sector.
NOW was up more than 1% in Friday’s pre-market session, with other software names also catching a bid.
New Products Targeting the Public Sector
On the same day, ServiceNow held its annual Government Forum and announced two new AI-powered products.
The first, EmployeeWorks, combines Moveworks’ conversational AI and enterprise search with ServiceNow’s Employee Center. It’s designed to act as an AI front door for government agency workforces.
The second, Autonomous Workforce, deploys AI specialists that can operate inside Government Community Cloud (GCC) and National Security Cloud (NSC) environments. These agents are built to work within the strict governance requirements of federal agencies.
ServiceNow’s Moveworks platform also received FedRAMP Moderate Authorization, meaning federal agencies can now deploy it with security compliance backing.
The company said its Level 1 Service Desk AI Specialist can resolve IT support requests 99% faster than human agents.
Wall Street Stays Bullish
Citizens reiterated a Market Outperform rating on NOW with a $260 price target. The stock currently trades around $120, putting it 43% below its 52-week high of $211.48.
The firm pointed to NOW’s positioning in the agentic AI era, citing its customer relationships, architecture, and AI Control Tower offering as key strengths.
NOW Assist ACV stands at $600 million and is expected to reach $1 billion by the end of 2026.
Citizens also flagged the pending Armis acquisition, expected to close in the first half of 2026. CEO McDermott has put the company’s total addressable market at over $600 billion.
ServiceNow’s gross profit margins sit at 77.5%, with 2026 revenue growth plus free cash flow margin expected to reach 57%, up from 55% in 2025. Twenty-eight analysts have revised earnings estimates upward ahead of the next reporting period.
Overall, Wall Street holds a Strong Buy consensus on NOW — 30 Buys, two Holds, and one Sell. The average price target of $191.20 implies around 59% upside from current levels.
In a separate move, CEO McDermott and other executives canceled their trading plans, a sign the leadership team sees value at current levels.
ServiceNow also appointed Danielle Fontaine as its new chief accounting officer, replacing Kevin McBride, who moves into an EVP role.
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