Why AI Stock ServiceNow Was Cruising Higher on Monday

Key Points

• An analyst published a rather positive new take on the company following its second-quarter earnings report.

• He reiterated his buy recommendation and maintained his lofty price target.

• 10 stocks we like better than ServiceNow ›

A new, bullish analyst note was a key catalyst for ServiceNow (NYSE: NOW) stock's lift as the trading week kicked off on Monday. The specialized tech company's shares were nearly 2% higher in value during mid-session action, contrasting well with the slight dip of the S&P 500 index at that point.

Plenty of fuel for optimism, says prognosticator

ServiceNow, a business process solutions specialist that has eagerly embraced artificial intelligence (AI) technology, was the subject of an update from Cantor Fitzgerald pundit Thomas Blakey.

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Before market open Monday, Blakey reiterated his overweight (buy, in other words) recommendation on ServiceNow. He also held fast to his $1,200-per-share price target, which is almost 22% above the stock's current level.

According to reports, the analyst's new take is based largely on the second-quarter results ServiceNow published late last week. Blakey waxed bullish about the take-up of the company's agentic AI products, such as Control Tower, and he feels that management's raised guidance for the third quarter is conservative, given the momentum of those products.

Public- and private-sector business

Despite the estimates-topping quarter and the raised guidance, some investors are wary of ServiceNow because of its considerable work for the federal government. They worry that cutbacks in federal spending will put quite a dent in this business.

Addressing that, Blakey wrote in his new note that the company hasn't suffered from this yet and if it does in the future, it should be able to adjust (presumably with increased take-up from private-sector clients).

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.