ServiceNow shares climb after Guggenheim upgrade amid AI concerns

ServiceNow shares rose 5% Wednesday after Guggenheim upgraded the stock to Buy and assigned a $125 price target, saying the valuation looks attractive even with risks from artificial intelligence. The upgrade followed a steep pullback in enterprise software stocks, with ServiceNow down about 33% so far in 2026 and Salesforce off roughly 38%.

Guggenheim analyst John DiFucci raised ServiceNow to Buy from Neutral and valued the company at about 7.5 times enterprise value to next-12-month recurring revenue. He wrote that the change reflects valuation more than a view that ServiceNow will be a major AI winner.

We believe current levels present an attractive opportunity for investors to purchase a comfortably profitable stock likely to continue to grow at double digits, DiFucci wrote.

He noted talks with management point to potential improvement in the company’s U.S. federal government business as procurement delays and spending disruptions ease.

DiFucci also upgraded Salesforce to Buy from Neutral, saying investors had become overly pessimistic about the software giant. He described an “Armageddon scenario” priced into Salesforce as “misaligned with reality” and placed the stock at about 3.7 times projected enterprise value to revenue over the next 12 months.

Realistically, the company will ‘struggle to grow much, but does not decline much either.’

The analyst cautioned that AI remains a risk rather than a guaranteed growth driver. He wrote, “We want to be clear that we are not upgrading shares because we see [ServiceNow] as an AI beneficiary,” and warned AI monetization at ServiceNow is “unlikely to materialize” and that the technology “does pose significant risks.” Analysts also pointed to talent migration to AI-native startups and reliance on acquisitions, including Armis, as ongoing risks to growth.

Separately, Evercore ISI reiterated an Outperform rating on ServiceNow with a $150 price target ahead of the company’s second-quarter earnings report. Evercore highlighted ServiceNow’s AI Control Tower plan, AI-native product packaging and a subscription revenue target of more than $30 billion by fiscal 2030. The firm estimated that goal implies roughly 17.5% compound annual growth in subscription revenue without requiring an acceleration.

For the second quarter, ServiceNow guided current remaining performance obligations growth of about 19.5% in constant currency, a figure that includes contributions from the Moveworks and Armis acquisitions. Evercore said constant-currency growth of 20% to 20.5% would likely meet expectations, while results around 21% or higher could help ease concerns about slowing organic growth.

Investors will watch ServiceNow’s upcoming results for signs that organic growth stabilizes as pressure in the federal government market eases and as companies adopt more AI tools.