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Why ServiceNow Stock Inched Higher on Monday
Key Points
That lift was substantial, at 23%.
The pundit is encouraged by how the company has integrated AI into its offerings.
An analyst's price target hike provided a bit of lift for ServiceNow (NYSE: NOW) stock as the trading week got underway on Monday. By the time the trading session ended, shares of the enterprise software company had risen by 1.6%.
Nothing artificial about AI improvements
That price target increase was substantial, too. The revision came from Cantor Fitzgerald's Thomas Blakey, who now believes ServiceNow's ceiling is $174 per share. Previously, he had set the price target at $141. Blakey maintained his overweight (i.e., buy) recommendation on the specialized tech stock.
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According to reports, the analyst wrote that the company was attracting more investor interest due to an increasing emphasis on security-driven, agentic artificial intelligence (AI) platforms. He added that checks with clients indicated they were actively upgrading, moving up to higher tiers that generate more revenue for the company.
With this tailwind at its back, Blakey feels that ServiceNow can reach management's goal of 30% of total annual contract value coming from AI by 2030.
Still in the bargain aisle
ServiceNow was a victim of the widespread sell-off affecting software stocks earlier this year. It has since recovered, and its embrace of AI is a key reason why.
It's still well down from its peaks. Meanwhile, the company continues to pump out growth, and that might be accelerated by greater AI integration. The stock's valuations are low given its AI-enhanced growth potential, so to me, this is looking like a bargain stock now.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.