ServiceNow Surges 4% as Analysts Defend AI Growth Story Ahead of Earnings
ServiceNow (NOW) shares jumped 4.26% on Thursday morning, sharply outperforming a flat S&P 500 as Wall Street analysts moved to defend the enterprise software giant following a brutal year-to-date sell-off. The move comes as TD Cowen and HSBC reiterated their bullish stances, citing constructive channel checks and robust AI adoption ahead of the company's highly anticipated first-quarter earnings report next week.
Analysts Call a Bottom on AI Disruption Fears
ServiceNow (NOW) rose to $98.20 in mid-morning trading, a 4.26% gain that stands in stark contrast to the S&P 500's marginal 0.14% uptick. The surge represents a significant relief rally for a stock that has been under intense pressure, falling approximately 43% since the start of 2026 due to concerns that generative AI might disrupt the traditional software-as-a-service (SaaS) model.
Today's catalyst is a wave of analyst commentary that suggests these fears are overblown. TD Cowen lowered its price target to $140 from $185 but maintained a 'Buy' rating, stating that their recent field checks remain 'constructive' regarding overall growth trends and the adoption of AI-specific SKUs. Analyst notes highlighted that ServiceNow's 'Now Assist' AI products are seeing strong deal activity, which could lead to a 'beat and raise' scenario when the company reports results on April 22.
Similarly, HSBC adjusted its price objective to $171 from $226 but kept its 'Buy' rating, noting that the current valuation offers a potential upside of over 70%. The firm emphasized that ServiceNow remains a primary beneficiary of enterprise AI spending, despite the broader market's recent skepticism.
Global Expansion and Infrastructure Growth
Beyond the analyst defense, ServiceNow provided fundamental evidence of its continued scaling. The company officially launched new data centers in Brazil this morning, aimed at supporting enterprise-scale AI solutions across Latin America. This infrastructure expansion is part of CEO Bill McDermott's strategy to position ServiceNow as the 'AI control tower' for global business reinvention.
Additionally, the company released its 'Customer Experience Report 2026,' which, while identifying gaps in how some organizations implement AI, underscored the massive total addressable market (TAM) for ServiceNow’s automated workflow solutions in regions like India and South America.
Technical Setup and Institutional Interest
Technically, the stock is rebounding from a 52-week low of $81.24 reached earlier this month. The current price of $98.20 reflects the impact of the 5-for-1 stock split completed in December 2025, which has made the shares more accessible to retail investors. Institutional activity also appears to be providing a tailwind; recent SEC filings show that firms like Trinity Legacy Partners have significantly increased their holdings in NOW, viewing the recent drawdown as a generational buying opportunity.
Looking ahead, all eyes are on the April 22 earnings call. Investors will be looking for confirmation that AI products are contributing more than 10% of total revenue, a milestone analysts believe could trigger a sustained re-rating of the stock back toward its historical multiples.
Key Takeaways
- ServiceNow shares are rebounding from a 43% YTD decline as analysts from TD Cowen and HSBC reiterate 'Buy' ratings despite lowering price targets.
- Constructive channel checks suggest strong adoption of AI-enabled workflow tools, positioning the company for a potential 'beat and raise' on April 22.
- The launch of new Brazil data centers signals continued global infrastructure investment to support enterprise AI demand.
- Trading at $98.20, the stock remains significantly below its post-split fair value estimates, attracting institutional buyers seeking a turnaround play.