--- title: "Bank of America raises ServiceNow to $130: Growth prospects are promising and expected to benefit from the AI wave" type: "News" locale: "en" url: "https://longbridge.com/en/news/286866721.md" description: "Bank of America has resumed coverage on ServiceNow with a \"Buy\" rating and a target price of $130. Analysts believe that ServiceNow will benefit from the AI wave, expecting a revenue growth rate between 18% and 22% before 2028, with free cash flow margins between 35% and 37%. Management expects operating margins and free cash flow margins to improve by approximately 100 basis points by 2027" datetime: "2026-05-19T06:47:04.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286866721.md) - [en](https://longbridge.com/en/news/286866721.md) - [zh-HK](https://longbridge.com/zh-HK/news/286866721.md) --- # Bank of America raises ServiceNow to $130: Growth prospects are promising and expected to benefit from the AI wave According to the Zhitong Finance APP, **Bank of America has resumed coverage of ServiceNow (NOW.US) with a "Buy" rating and a target price of $130.** Analysts believe that although artificial intelligence (AI) is disrupting the software industry landscape, ServiceNow is expected to be a beneficiary of the AI wave rather than being replaced. Analyst Tal Liani wrote in a report to clients: "While AI is reshaping the software industry, we believe that ServiceNow will benefit from new AI solutions rather than being replaced by them." "The company's current starting point is very strong, occupying a deeply embedded and critical position in enterprise workflows, acting as the management, routing, approval, and auditing system for activities within the entire organization. Therefore, the cost and complexity of replacing its systems are high. Its leading position may allow the 'agent-based AI' cycle to transform into a new growth driver. We believe that the depth and breadth of ServiceNow in the workflow system will enable it to significantly benefit from the deployment of autonomous intelligent agents in IT, employee, and customer workflows." The analyst further pointed out that ServiceNow's revenue growth rate is expected to maintain between 18% and 22% from now until 2028, with free cash flow profit margins expected to remain between 35% and 37%, driven by platform expansion, improved budget acquisition capabilities, and the commercialization of AI. The analyst added: "It is worth noting that the company's current remaining performance obligations (cRPO) growth rate has exceeded 20% for five consecutive quarters, highlighting sustained strong demand and the importance of the platform." "Management expects that by 2027, operating profit margins and free cash flow profit margins will further increase by about 100 basis points, even while continuing to invest in AI, still achieving operational leverage expansion. Currently, the stock is valued at about 14 times the expected enterprise value/free cash flow (EV/FCF) for 2027, which we believe is an attractive valuation, as the company has a faster growth rate and stronger profitability compared to its peers." ServiceNow reported better-than-expected first-quarter results last month and raised its full-year guidance. However, the company noted that conflicts in the Middle East have dragged down subscription revenue growth. The financial report showed that ServiceNow's first-quarter revenue grew 22% year-over-year to $3.77 billion, slightly above the average analyst expectation of $3.74 billion. By business segment, subscription revenue grew 22% year-over-year to $3.671 billion; professional services and other revenue grew 18.5% year-over-year to $99 million. In terms of earnings, net profit was $469 million; adjusted earnings per share were $0.97, slightly above the average analyst expectation of $0.96. ServiceNow stated that first-quarter subscription revenue growth "was negatively impacted by about 75 basis points due to delays in signing several large local deployment projects caused by ongoing conflicts in the Middle East." However, the company still raised its fiscal year 2026 subscription revenue guidance to $15.74 billion to $15.78 billion, higher than the previously provided range of $15.53 billion to $15.57 billion The company's guidance range for second-quarter subscription revenue is between $3.815 billion and $3.820 billion, representing a year-over-year increase of approximately 22.5%, which is higher than the analysts' average expectation of $3.75 billion. ServiceNow stated that the remaining performance obligations (CRPO) for the first quarter were $12.64 billion, exceeding the market expectation of $12.56 billion; the company completed 16 new deals with an annual contract value of over $5 million in the first quarter, a year-over-year increase of nearly 80%. In terms of AI business, the number of customers with an annual ACV exceeding $1 million for the company's AI assistant product Now Assist has increased by over 130% year-over-year, which management views as an important signal of accelerated monetization capability of the platform AI. Bill McDermott, Chairman and CEO of ServiceNow, stated in the earnings release that customers are using the company's platform as an "AI control tower for business transformation," emphasizing that the growth of the AI business "has far exceeded the company's own expectations." ### Related Stocks - [NOW.US](https://longbridge.com/en/quote/NOW.US.md) - [NOWL.US](https://longbridge.com/en/quote/NOWL.US.md) - [BAC.US](https://longbridge.com/en/quote/BAC.US.md) - [BAC-Q.US](https://longbridge.com/en/quote/BAC-Q.US.md) - [BML-L.US](https://longbridge.com/en/quote/BML-L.US.md) - [BAC-L.US](https://longbridge.com/en/quote/BAC-L.US.md) - [BAC-K.US](https://longbridge.com/en/quote/BAC-K.US.md) - [BML-H.US](https://longbridge.com/en/quote/BML-H.US.md) - [BAC-N.US](https://longbridge.com/en/quote/BAC-N.US.md) - [BAC-E.US](https://longbridge.com/en/quote/BAC-E.US.md) - [MER-K.US](https://longbridge.com/en/quote/MER-K.US.md) - [BAC-O.US](https://longbridge.com/en/quote/BAC-O.US.md) - [BML-G.US](https://longbridge.com/en/quote/BML-G.US.md) - [BAC-M.US](https://longbridge.com/en/quote/BAC-M.US.md) - [BAC-B.US](https://longbridge.com/en/quote/BAC-B.US.md) - [BML-J.US](https://longbridge.com/en/quote/BML-J.US.md) - [BAC-S.US](https://longbridge.com/en/quote/BAC-S.US.md) - [BAC-P.US](https://longbridge.com/en/quote/BAC-P.US.md) - [8648.JP](https://longbridge.com/en/quote/8648.JP.md) ## Related News & Research - [Did Jim Cramer Call The Top On ServiceNow Stock?](https://longbridge.com/en/news/286953293.md) - [09:16 ETC1Secure Launches SmartReady, Giving Every ServiceNow Platform Owner the Tools to Validate, Govern, and Assure Rapid Production Releases](https://longbridge.com/en/news/286920243.md) - [What's Going On With ServiceNow Stock Monday?](https://longbridge.com/en/news/286749332.md) - [What's Going On With ServiceNow Stock Tuesday?](https://longbridge.com/en/news/286940311.md) - [Experian Partners With ServiceNow to Scale Trusted Decisioning to Agentic AI | NOW Stock News](https://longbridge.com/en/news/286514647.md)