Bank of America Restarts Buy Rating on ServiceNow with $130 Target
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 18 2026
0mins
Source: seekingalpha
- AI Impact and Market Positioning: Analyst Tal Liani from Bank of America emphasizes that while AI disrupts the software landscape, ServiceNow is positioned to benefit from new AI solutions due to its critical role in enterprise workflows, indicating a strong market foundation.
- Revenue Growth Expectations: ServiceNow is projected to achieve revenue growth between 18% and 22% by 2028, driven by platform expansion and monetization of artificial intelligence, showcasing the company's adaptability and growth potential in a rapidly evolving market.
- Cash Flow and Profit Margins: Analysts expect ServiceNow's free cash flow margins to range between 35% and 37%, with management anticipating approximately 100 basis points of operating margin and free cash flow margin expansions by 2027, further enhancing the company's financial health.
- Market Attractiveness: Currently trading at 14x CY27E EV/FCF, ServiceNow demonstrates faster growth and superior profitability compared to peers, leading analysts to view the stock as attractive and worthy of investor attention.
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Analyst Views on NOW
Wall Street analysts forecast NOW stock price to rise
32 Analyst Rating
30 Buy
2 Hold
0 Sell
Strong Buy
Current: 99.690
Low
172.00
Averages
222.81
High
263.00
Current: 99.690
Low
172.00
Averages
222.81
High
263.00
About NOW
ServiceNow, Inc. provides an artificial intelligence (AI) platform for business transformation. The Company’s AI platform connects people, processes, data, and devices to increase productivity and maximize business outcomes. Its intelligent platform, the Now Platform, is a cloud-based solution that helps enterprises and organizations across public and private sectors digitize workflows. The workflow applications built on the Now Platform are organized into four primary areas: Technology, CRM and Industry, Core Business and Creator. Its products include IT Service Management, IT Operations Management, HR Service Delivery, ServiceNow AI Agents, AI Experience, Build Agent, ServiceNow AI Control Tower, AI Agent Fabric, RaptorDB, Workflow Data Fabric, Workplace Service Delivery, ServiceNow Platform Encryption, Telecommunications Service Operations Management, and others. The Company also offers identity security, helping organizations secure access across the enterprise.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- AI Product Demand: The flagship AI product, Now Assist, is generating $1 billion in annual revenue and is on track to reach $1.5 billion by year-end, indicating ServiceNow's strengthening competitive position within enterprises.
- Strategic Partnership: The collaboration with Nvidia to launch Project Arc aims to provide autonomous desktop agents for IT administrators and developers, further solidifying ServiceNow's role as the operating system for agentic AI.
- Data Advantage: ServiceNow processes 100 billion workflows annually, covering 7 trillion transactions with a 25% year-over-year growth rate, creating a data moat that continuously enhances its AI performance over time.
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- Subscription Revenue Growth: In the first quarter, ServiceNow's subscription revenue grew 19% year-over-year to nearly $3.7 billion, exceeding expectations and prompting management to raise its full-year outlook, now forecasting a 20.5% to 21% increase in subscription revenue for the year.
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- Strong Performance: ServiceNow's Q1 subscription revenue grew 19% year-over-year to nearly $3.7 billion, exceeding expectations and prompting management to raise its full-year outlook, now forecasting a 20.5% to 21% increase in subscription revenue for the year.
- AI Product Demand: The flagship AI product, Now Assist, is generating $1 billion in annual revenue and is on track to reach $1.5 billion by year-end, indicating ServiceNow's strengthening competitive position within enterprises.
- Strategic Partnership: The collaboration with Nvidia to launch Project Arc aims to provide autonomous desktop agents for IT administrators and developers, further solidifying ServiceNow's role as the operating system for agentic AI.
- Data Advantage: ServiceNow processes 100 billion workflows annually, covering 7 trillion transactions with a 25% year-over-year growth rate, creating a data moat that continuously enhances its AI performance over time.
See More
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- Share Price Recovery: The Trade Desk's shares surged 3.1% in the afternoon session, reaching $22.13, which is a 4% increase from the previous close, indicating market confidence in its future growth potential.
- Interest Rate Impact: A drop in the 10-year Treasury yield can boost SaaS valuations by 5-10%, highlighting the market's sensitivity to long-duration cash flows, particularly given the high renewal rates of these contracts.
- Market Sentiment Shift: With progress in Iran peace talks, market sentiment has calmed, leading investors to focus on SaaS companies that can leverage AI to extend their competitive moats, suggesting a healthier market environment compared to the previous day's broad sell-off.
- Long-term Underperformance: Despite today's rebound, The Trade Desk has declined 41.3% since the beginning of the year, and its current share price remains 75.4% below its 52-week high, reflecting ongoing concerns about its future growth trajectory.
See More
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- Stock Decline: ServiceNow's stock has fallen approximately 60% from its highs, primarily due to investor concerns about potential disruptions from artificial intelligence in the enterprise software sector, despite the company's strong first-quarter performance indicating resilience in the market.
- Subscription Revenue Growth: In the first quarter, ServiceNow's subscription revenue grew 19% year-over-year to nearly $3.7 billion, exceeding expectations and prompting management to raise its full-year outlook, now forecasting a 20.5% to 21% increase in subscription revenue for the year.
- AI Product Performance: The flagship AI product, Now Assist, is generating $1 billion in annual revenue and is on track to reach $1.5 billion by year-end, reflecting ServiceNow's strengthening competitive position in enterprises, particularly with its integration into the automation engine, Action Fabric.
- Data Advantage: ServiceNow processes 7 trillion transactions annually and runs 100 billion workflows, with a year-over-year growth rate of 25%, creating a substantial data moat that continuously supports its AI, establishing a critical competitive edge in the AI era.
See More
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- Investment Opportunity Analysis: A recent report highlights two undervalued stocks that, despite attractive valuations, are not included in The Motley Fool Stock Advisor's recommendations, indicating that investors should exercise caution in their selections.
- Technological Dependency: A little-known company is labeled an 'Indispensable Monopoly' for providing critical technology needed by Nvidia and Intel, suggesting its potential pivotal role in future technological advancements.
- Historical Return Comparison: Past recommended stocks like Netflix and Nvidia show that a $1,000 investment at the time of recommendation could yield returns of $481,589 and $1,345,714 respectively, demonstrating the significant market outperformance of The Motley Fool Stock Advisor's picks.
- Investor Community: Joining The Motley Fool Stock Advisor grants access to the latest top ten stock recommendations, allowing investors to connect with a community of individual investors to share experiences and strategies.
See More
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- Investor Attraction: As of the afternoon of May 20, 2026, certain beaten-down stocks are trading at attractive valuations, potentially drawing interest from investors seeking low-priced investment opportunities.
- Market Reaction: The poor performance of these stocks has garnered market attention, leading investors to reassess their potential value, which could drive future price rebounds.
- Valuation Analysis: Analysts indicate that the current valuation levels of these stocks may not reflect their fundamentals, suggesting that investors could see opportunities for value recovery in the coming months.
- Investment Strategy Adjustment: With increasing interest in these stocks, investors may adjust their portfolios to capitalize on potential rebound opportunities, further influencing market dynamics.
See More
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- Consumer Sentiment Decline: The University of Michigan's consumer sentiment index was revised down to a record low of 44.8, below the expected 48.2, indicating growing concerns among consumers about the economic outlook, which may impact future spending.
- Rising Inflation Expectations: The 1-year inflation expectations for May were revised upward to 4.8%, exceeding the expected 4.6%, potentially prompting the Federal Reserve to consider interest rate hikes in upcoming meetings, which could pressure the stock market.
- Tech Stocks Lead Gains: Workday's stock surged over 5% after reporting Q1 adjusted EPS of $2.66, surpassing expectations, highlighting strong performance in the software sector and potentially attracting more investor interest in tech stocks.
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