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On Wednesday, Scotiabank (TSX:BNS) analyst Allan Verkhovski increased the price target for ServiceNow (NYSE:NOW) shares to $1,100 from the previous target of $1,075, while maintaining a Sector Outperform rating. With a market capitalization of nearly $200 billion, ServiceNow is currently trading near its InvestingPro Fair Value. Verkhovski praised the company, highlighting its strong positioning in the enterprise software market and its leadership in AI-driven business transformation.
ServiceNow’s consistent performance and the positive feedback from customers and partners were noted as key factors contributing to the analyst’s optimistic outlook. The company’s impressive 79% gross profit margin and 21% revenue growth over the last twelve months support this positive sentiment. Verkhovski mentioned the company’s annual financial analyst day, where ServiceNow’s achievements and strategy were showcased, leaving attendees impressed despite broader economic challenges. (InvestingPro subscribers have access to 15+ additional key metrics and insights about ServiceNow’s financial performance.)
The analyst pointed out ServiceNow’s appeal to executive decision-makers due to its ability to enhance employee productivity, improve outcomes while reducing costs, and facilitate the transition from legacy systems. With an "GREAT" Financial Health score from InvestingPro and moderate debt levels, Verkhovski sees the projected $100 million in annualized cost savings in 2025 as a compelling argument for the company’s AI-driven return on investment.
Despite some customers not being ready to adopt ServiceNow’s Now Assist, Verkhovski remains bullish, noting that its Annual Contract Value (ACV) has already exceeded $250 million and is on track to surpass $1 billion by the fiscal year 2026. He also addressed ServiceNow’s mergers and acquisitions strategy, observing no change in the company’s appetite, with a continued focus on smaller, strategic acquisitions, especially in data management.
Verkhovski concluded with positive remarks on Logik.ai’s AI-powered CPQ (Configure, Price, Quote) offering, which he believes will help ServiceNow expedite its expansion into the Customer Relationship Management (CRM) space by bolstering its ability to sell, fulfill, and service all on a single platform.
In other recent news, ServiceNow has introduced a new AI-powered Customer Relationship Management (CRM) system at the Knowledge 2025 event, reporting a 30% year-over-year growth in its annual contract value, reaching $1.4 billion by the end of 2024. The CRM aims to streamline workflows and enhance customer experiences by automating tasks and reducing inefficiencies. ServiceNow has also announced a strategic partnership with UKG to integrate AI into workplace operations, focusing on improving productivity and efficiency across HR, payroll, and workforce management. This collaboration is expected to yield productivity gains of up to 50% for complex tasks.
Additionally, ServiceNow unveiled its AI Control Tower and AI Agent Fabric, designed to optimize AI investments and ensure responsible integration into enterprise strategies. The AI Control Tower provides comprehensive AI management, while the AI Agent Fabric facilitates real-time data exchange and collaboration between AI agents. In partnership with NVIDIA (NASDAQ:NVDA), ServiceNow introduced the Apriel Nemotron 15B reasoning model to enhance AI decision-making and workflow management, aiming to lower latency and inference costs.
ServiceNow University was launched to address the demand for AI-driven upskilling, offering a personalized learning experience for employees, customers, and partners. The initiative is part of ServiceNow’s response to technological changes in the workplace, with a goal to reach 3 million learners by 2027. These developments reflect ServiceNow’s commitment to leveraging AI for improved productivity and business outcomes, while also addressing potential risks and uncertainties associated with AI deployment.
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