Analysts weigh in on ServiceNow investor day

Investing.com -- ServiceNow’s (NYSE:NOW) 2025 Investor Day reinforced confidence in its long-term growth trajectory, with Wall Street analysts highlighting strong execution, expanding addressable market, and solid AI momentum.

The company’s management introduced new AI products, reiterated key financial targets, and positioned the platform as the “AI operating system of the enterprise.”

ServiceNow said it expects a $1 billion AI annual contract value (ACV) business in 2026, supported by rapid adoption of new tools like AI Control Tower, AI Fabric, and AI Agent Studio.

“We found the demonstrations/adoption/solutions demonstrating a strong AI vision and compelling value proposition,” Oppenheimer analyst Brian Schwartz said in a note. The firm raised the price target to $1,100 from $970 after the investor day.

Management also reaffirmed 2025 guidance and accelerated margin targets for 2027, raising the long-term free cash flow (FCF) margin goal by 100 basis points.

In a separate note, Morgan Stanley (NYSE:MS) analysts emphasized ServiceNow’s consistent core growth and expansion into customer relationship and industry-specific workflows.

Management said the company’s customer relationship management (CRM) and industry workflows now generate $1.4 billion in ACV, up from just $20 million in 2016, with CRM transactions up 62% year-on-year as of March 2025

“ServiceNow has seen a 62% increase in front office transactions YoY,” Morgan Stanley’s report said, pointing to growing interest in front-office AI integration following the Logik.ai acquisition.

The bank’s analysts highlighted Pro Plus as the fastest-growing product family in the company’s history, with $250 million+ in ACV. “>55% of the company’s ITSM/CSM customers are on Pro/Enterprise with >10% of those accounts on Pro Plus."

The company is realizing meaningful pricing uplift—25% on average from Standard to Pro, and ~30% from Pro to Pro Plus.

While the financial outlook remained unchanged, AI-related efficiencies were a key watchpoint. Management expects $100 million in cost savings from AI in 2025, and Morgan Stanley sees potential for margin upside as these efficiencies scale.

“Given AI-related efficiencies are earlier innings, we believe this suggests margin-related benefits could continue to scale over time,” analysts led by Keith Weiss said. “However, management noted they will take a balanced approach and also reinvest these benefits to continue to drive growth longer term.”

Partner feedback gathered by Oppenheimer was also positive, with system integrators describing stable demand and strong pipelines.

The brokerage sees ServiceNow well-positioned to surpass its $15 billion subscription revenue goal for 2026 and maintain strong profit growth driven by its broad platform strategy and expanding customer base.

The software maker estimates its total addressable market will more than double from $165 billion in 2023 to over $350 billion by 2027, driven by expansion into AI, data, CRM, and industry-specific workflows.

This article first appeared in Investing.com