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Bank of America recently named ServiceNow a top AI beneficiary.
Jensen Huang stated that agentic AI will only spur software growth.
Fears of AI competition have caused a major valuation disconnect in NOW shares.
Although the market has been volatile this week, ServiceNow shares are on a tear. Below are three reasons why:
Bank of America Upgrade Boosts NOW
ServiceNow ((NOW - Free Report) ) is a software-as-a-service enterprise workflow leader. ServiceNow’s “Now” platform is used by more than 85% of Fortune 500 companies and nearly 60% of Global 2000 enterprises. Despite ServiceNow’s software dominance, shares have slid 50% over the past year as investors have adopted a “sell first, ask questions later” mindset amid artificial intelligence disruption fears.
However, ServiceNow’s fortunes appear to be changing this week. NOW shares are up more than 10% this week following a Bank of America ((BAC - Free Report) ) analyst note. Not only does Bank of America not see NOW being disrupted, but they also see the company as a top AI beneficiary, saying:
“We believe ServiceNow’s current position is difficult to challenge. The company began its journey with IT Service Management (ITSM), software used to log, classify, prioritize, and resolve internal technology issues. It has since expanded into adjacent enterprise service and operational workflows, including IT Operations Management (ITOM), IT Asset Management (ITAM), Security Operations (SecOps), HR service delivery, customer service, creator workflows, procurement, and broader enterprise automation. These workflows are high-volume, compliance-sensitive, deeply integrated, and difficult to replace once embedded.”
Meanwhile, ServiceNow has maintained a robust 97% customer renewal rate in each quarter since Q4 2019, suggesting that, despite the latest AI innovations outside of ServiceNow, customers remain loyal.
Image Source: @ashton_1invests, Fiscal.AI
Huang Comments Boost Software
During his recent keynote appearance at ServiceNow’s Knowledge 2026 conference, NVIDIA’s ((NVDA - Free Report) ) iconic CEO Jensen Huang disputed AI software disruption claims, saying, “Agentic AI is completely accretive for software companies.” In a separate CNBC interview, Huang added, “AI will be one of the greatest transformations for the software industry ever. For the first time, service is software, software is service – and the service industry is 100 times bigger than the software industry. Now, for the first time, you’re going to have human agents that are, of course, managed and supported by ServiceNow, augmented by AI agents that are going to be walking autonomously with humans.”
Price Diverging from Free Cash Flow
Until 2025, ServiceNow’s share price has followed free cash flow. However, when software investors “threw out the baby with the bath water” in 2025, these metrics diverged heavily for the first time. Nevertheless, NOW’s FCF has actually accelerated since the AI fears hit the stock, forcing shorts to cover their bets and bulls to buy back the stock.
Image Source: @financejack44, VJNAI
Bottom Line
While the broader market experiences volatility, ServiceNow shares are suddenly skyrocketing. Wall Street incorrectly panicked that AI would disrupt the enterprise software giant, but now it is playing catch-up.
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3 Reasons ServiceNow (NOW) is Soaring
Key Takeaways
Although the market has been volatile this week, ServiceNow shares are on a tear. Below are three reasons why:
Bank of America Upgrade Boosts NOW
ServiceNow ((NOW - Free Report) ) is a software-as-a-service enterprise workflow leader. ServiceNow’s “Now” platform is used by more than 85% of Fortune 500 companies and nearly 60% of Global 2000 enterprises. Despite ServiceNow’s software dominance, shares have slid 50% over the past year as investors have adopted a “sell first, ask questions later” mindset amid artificial intelligence disruption fears.
However, ServiceNow’s fortunes appear to be changing this week. NOW shares are up more than 10% this week following a Bank of America ((BAC - Free Report) ) analyst note. Not only does Bank of America not see NOW being disrupted, but they also see the company as a top AI beneficiary, saying:
“We believe ServiceNow’s current position is difficult to challenge. The company began its journey with IT Service Management (ITSM), software used to log, classify, prioritize, and resolve internal technology issues. It has since expanded into adjacent enterprise service and operational workflows, including IT Operations Management (ITOM), IT Asset Management (ITAM), Security Operations (SecOps), HR service delivery, customer service, creator workflows, procurement, and broader enterprise automation. These workflows are high-volume, compliance-sensitive, deeply integrated, and difficult to replace once embedded.”
Meanwhile, ServiceNow has maintained a robust 97% customer renewal rate in each quarter since Q4 2019, suggesting that, despite the latest AI innovations outside of ServiceNow, customers remain loyal.
Image Source: @ashton_1invests, Fiscal.AI
Huang Comments Boost Software
During his recent keynote appearance at ServiceNow’s Knowledge 2026 conference, NVIDIA’s ((NVDA - Free Report) ) iconic CEO Jensen Huang disputed AI software disruption claims, saying, “Agentic AI is completely accretive for software companies.” In a separate CNBC interview, Huang added, “AI will be one of the greatest transformations for the software industry ever. For the first time, service is software, software is service – and the service industry is 100 times bigger than the software industry. Now, for the first time, you’re going to have human agents that are, of course, managed and supported by ServiceNow, augmented by AI agents that are going to be walking autonomously with humans.”
Price Diverging from Free Cash Flow
Until 2025, ServiceNow’s share price has followed free cash flow. However, when software investors “threw out the baby with the bath water” in 2025, these metrics diverged heavily for the first time. Nevertheless, NOW’s FCF has actually accelerated since the AI fears hit the stock, forcing shorts to cover their bets and bulls to buy back the stock.
Image Source: @financejack44, VJNAI
Bottom Line
While the broader market experiences volatility, ServiceNow shares are suddenly skyrocketing. Wall Street incorrectly panicked that AI would disrupt the enterprise software giant, but now it is playing catch-up.