Macquarie Sees Strength in ServiceNow (NOW) but Limited Near-Term Upside

ServiceNow Inc. (NYSE:NOW) is one of the AI stocks analysts are betting on. Macquarie began coverage of ServiceNow Inc. (NYSE:NOW) on November 25 with a Neutral rating and $860 price target, noting that the company is performing well but already priced for much of its potential upside. The firm noted that ServiceNow trades at a premium to other software names even as sentiment across the SaaS space remains soft. It pointed to the company’s progress in AI driven workflow automation and early momentum for its Now Assist tools but also warned about integration and execution risks as ServiceNow expands beyond IT service management into areas like customer service, HR, compliance, and industry workflows.

Despite the cautious stance, Macquarie highlighted the company’s strong fundamentals. ServiceNow posted a mid-50s Rule of 40 score, fiscal 2024 subscription revenue of $10.646 billion, up 23 percent from last year, and a free cash flow margin of 31 percent. Macquarie’s revenue and earnings estimates for the next several years are above market expectations, and the firm said upcoming results, fiscal 2026 guidance, and updates on AI monetization could serve as catalysts.

Earlier, on November 18, ServiceNow announced new Microsoft integrations, including Agent 365, designed to enhance enterprise AI orchestration and governance. The AI Control Tower will oversee agents across Microsoft Foundry and Copilot Studio, while Build Agent integrates with GitHub for secure automation. ServiceNow also plans to connect Now Assist with Microsoft 365 apps like Word, Outlook, and Teams, with general availability expected by year-end.

ServiceNow Inc. (NYSE:NOW) is a technology company that utilizes AI to automate and enhance digital workflows for businesses across IT, customer service, and HR. The company’s AI Platform integrates artificial intelligence, data, and workflows.

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Disclosure: None. This article is originally published at Insider Monkey.