ServiceNow (NYSE:NOW) shares surged more than 15% in regular trading Thursday after the company posted strong Q1 2025 results and highlighted fresh momentum around its AI agent offerings.
CEO William McDermott struck an optimistic tone during the earnings call, framing current economic and policy pressureslike tariffs and regulatory shiftsas opportunities. You don't build a defining company by surrendering to uncertainty, he said, pointing to solid demand for ServiceNow's AI-powered business platform.
One standout segment was the public sector. McDermott said the company's U.S. government business jumped over 30% year-over-year, landing 11 federal dealstwo of which topped $5 million. The company's AI agents are already helping one agency automate contract reviews and cut costs.
ServiceNow also launched its Yokohama platform in Q1, designed to combine AI agents, data, and workflow automation into a unified system. While it opens new opportunities, it also invites competition from Salesforce (NYSE:CRM), Microsoft (NASDAQ:MSFT), Palantir (NASDAQ:PLTR), and OpenAIall developing agent-driven solutions.
Morgan Stanley responded positively to the update, raising its price target to $950 from $881. Analysts highlighted ServiceNow's steady growth and ability to ease investor concerns with better-than-expected performance obligation growth.
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