Calls to rein in AI lift ServiceNow stock

ServiceNow shares rose 7.4% to close at $142.35 on Sept. 14 after calls to slow development of advanced AI models led investors to reassess demand for AI governance. The PHLX Semiconductor Index fell 5.9% the same day, reflecting weaker sentiment for chipmakers and cloud infrastructure firms while some software names gained.

Investors highlighted ServiceNow’s AI Control Tower and the newly generally available AI Gateway as products that address oversight of autonomous agents. AI Control Tower is designed to help customers discover, govern and monitor deployed AI systems. AI Gateway adds runtime controls for how agents connect to tools and services. ServiceNow says the features can enforce authentication and access policies, block responses that expose sensitive information, scan for suspicious tools and pause servers or integrations without code changes.

Analysts updated their outlooks after meetings and product announcements. Needham raised its price target to $155 from $115 and maintained a Buy rating, calling its view of ServiceNow’s positioning and roadmap incrementally more positive. Bernstein kept an Outperform rating and a $248 target, noting the company’s goal of $30 billion to $32 billion in annual contract value by 2030 includes roughly 30% from AI-related sales. Bernstein analyst Peter Weed noted that achieving more than $9 billion of AI-derived ACV would likely require more than incremental product upgrades and that consumption-based AI revenue becoming material remains uncertain.

Market strategists at Morgan Stanley have pointed to a shift in investor preference toward companies with strong free cash flow, AI adoption and asset-light models. ServiceNow does not need to build large data centers to participate in AI spending, a characteristic analysts say fits that investor preference.

Analysts and investors note a trade-off for ServiceNow: greater concern about uncontrolled AI could increase demand for governance tools such as Control Tower and Gateway, while a broader slowdown in enterprise AI adoption would reduce the revenue pool those tools address. Market participants will watch whether enterprises continue to deploy autonomous agents widely but with tighter controls.