ServiceNow Stock Rises on AI Governance Updates
ServiceNow stock rose after unveiling AI Passport and EmployeeWorks as analysts lifted targets, driving flows into enterprise software ahead of earnings.
KEY TAKEAWAYS
- Following the Oct. 15 rollout, ServiceNow unveiled AI Passport and third-gen EmployeeWorks for no-code AI agents.
- TD Cowen raised its price target to $165 and said AI annual contract value topped $1.0 billion.
- The product updates refocused investors ahead of the company's upcoming earnings report.
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ServiceNow Inc. (NOW) stock rose after the company unveiled new AI governance tools and rolled out third-generation employee AI features that let staff build no-code agents. Analysts raised price targets as attention shifted to IT-service upgrades ahead of the company’s Oct. 28 earnings report.
AI Governance and No-Code Agents
On Oct. 15, ServiceNow announced AI Passport and expanded governance capabilities designed to ensure AI agents are production-ready. The company also introduced the third generation of EmployeeWorks, its employee-centric AI platform, which allows employees to build and customize AI agents without coding.
These updates link governance with ease of adoption, positioning the tools as controls and delivery mechanisms for enterprises moving AI from pilots into daily workflows.
Analyst Upgrade and Outlook
TD Cowen raised its price target to $165 from $140 and maintained a Buy rating, citing an expected strong third quarter supported by increased IT-service-management Prime upgrades, active cross-selling of core products, and demand across security, the Armis unit, and U.S. federal operations.
The analyst noted that ServiceNow’s annual contract value tied to AI had exceeded $1 billion. Channel checks indicated that roughly half of renewal discussions led to AI upgrades, typically to the Prime tier, which could raise average selling prices by about 30%.
TD Cowen highlighted potential modest acceleration in current remaining performance obligations (cRPO), the contracted revenue expected to be recognized over the next 12 months. The firm also flagged ServiceNow’s dependence on its IT-service-management franchise and large multimillion-dollar deals as risks that could affect performance.
ServiceNow is scheduled to report third-quarter results on Oct. 28.
