ServiceNow Shares Gain Momentum on Analyst Reassessment

A shift in sentiment from Wall Street is providing a lift for ServiceNow's stock. A prominent analyst has challenged the recent market narrative, suggesting the sell-off in major software names has been overdone. The core of the argument is that fears of artificial intelligence (AI) completely displacing established software models are exaggerated. Instead, ServiceNow is positioned as a potential beneficiary of the AI transition.

This revised outlook found a receptive audience among investors. Following a significant pullback from previous highs, buying interest returned, pushing the share price back above the $104 level.

The analyst's upgrade arrives against a backdrop where the company has already demonstrated fundamental strength. In late January, ServiceNow reported fourth-quarter revenue of $3.57 billion, representing a 21% year-over-year increase. Earnings per share came in at $0.92, also surpassing market expectations.

Perhaps of equal importance to shareholders was a concurrent capital return announcement. The company's board authorized a new $5 billion share repurchase program. This initiative includes an accelerated share repurchase (ASR) transaction of $2 billion, which is already underway and is intended to reduce the share count. During periods of market volatility, such a program can act as a stabilizing force by introducing a substantial buyer into the market.

Should investors sell immediately? Or is it worth buying ServiceNow?

The AI Narrative: Disruption or Opportunity?

The central thesis of the bullish analyst call is a direct rebuttal to prevailing concerns. The analyst contends that the market has priced in a scenario where AI supplants traditional software platforms, a premise deemed flawed. In this view, ServiceNow is not a legacy player at risk but a "structural winner" from the AI revolution.

The underlying message is clear: not every AI story spells obsolescence. For ServiceNow, AI technology could potentially unlock new product and revenue streams, complementing rather than cannibalizing its core workflow automation business. This perspective was underscored by Wedbush Securities reinstating ServiceNow on its "AI 30 List" this week.

Path Forward: Sustaining Growth in a New Era

Combined with the active buyback program, this renewed analyst support points to a potential inflection in sentiment. However, the stock's recovery path remains substantial, with the current price still trading notably below its 52-week high of over $211.

The critical factors for ServiceNow will be its ability to maintain its targeted subscription revenue growth—approximately 20% by 2026 is anticipated—and to successfully monetize new, AI-driven offerings. The company's success in these areas will determine whether the current momentum can be sustained over the longer term.