ServiceNow (NOW) shares climbed 2.2% to $102.12 in Wednesday's trading session, outperforming a mixed software sector as investors responded to signs of steady enterprise demand. The stock reached an intraday high of $106.59 before settling, with approximately 28.5 million shares changing hands. The company's market capitalization stood at roughly $106.2 billion.
The move came after Oppenheimer reaffirmed its Outperform rating and $130 price target on the stock. The firm cited a customer survey of 64 ServiceNow clients conducted this month, which indicated that demand for the company's AI, IT, risk, and security products remains strong despite broader hiring constraints. This positive signal helped the stock buck the trend of a generally weak software sector, where peers like Salesforce (CRM) slipped 0.8%, Oracle (ORCL) dropped 1.1%, and Workday (WDAY) ticked up just 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) was off about 1.1%.
Despite Wednesday's rebound, ServiceNow's stock remains well below last year's peak. The shares had dropped 2.16% to $99.92 on Tuesday, according to MarketWatch data, and the current price is still far from the highs seen in 2025. The recovery is on shaky ground, with lingering concerns about AI disruption, margin pressure, and slow government deals in the Middle East weighing on sentiment.
ServiceNow reported its first-quarter results in April, posting subscription revenue of $3.67 billion, a 22% increase year-over-year. Current remaining performance obligations (cRPO) came in at $12.64 billion, up 22.5% from a year ago. CEO Bill McDermott said the quarter "beat the high end" of guidance. However, Reuters reported last month that first-quarter subscription growth was held back by slow government deals in the Middle East.
ServiceNow is positioning itself as more than just a software provider, aiming to become a control layer for business AI. In May, the company allowed outside AI agents, such as Anthropic's Claude, to use its Action Fabric system. These agents can now initiate approved workflows, moving beyond simple read or write data operations. Anthropic's Boris Cherny commented, "The gap between knowing and doing is where productivity dies."
In other news, OpenAI has hired ServiceNow's marketing chief, Colin Fleming, as CMO of its business unit, as reported by Adweek on Tuesday. Fleming described leaving ServiceNow as "gut-wrenching" but said he would have "regretted not taking the swing." This move signals OpenAI's deepening enterprise focus.
Bank of America has also weighed in, initiating coverage of ServiceNow with a Buy rating and a $130 price target, while assigning an Underperform rating to Salesforce. Analyst Tal Liani sees ServiceNow as poised to benefit from AI, while Salesforce faces a "structural reset," according to Barron's.
However, not all analysts are bullish. UBS lowered its rating on ServiceNow to Neutral in April, warning that IT budgets are shifting toward AI and that customers could use new AI tools to build their own simpler applications, potentially reducing reliance on ServiceNow's platform. Additionally, the acquisition of Armis is expected to impact cash flow and margins.
For now, traders see a straightforward setup: demand checks came in solid, and there is still appetite for ServiceNow's AI narrative. But the real test lies ahead, as the company must prove that its AI agents can boost revenue faster than they disrupt the older software model.
