ServiceNow NYSE:NOW stock climbed about 7% onearly Thursday after the enterprise software company reported quarterly results that topped Wall Street expectations and raised its full-year outlook, while Chief Executive Bill McDermott said growing artificial intelligence adoption is strengthening the company's business.
McDermott dismissed concerns that the rapid expansion of AI could pressure margins or shorten customer contracts. Speaking on CNBC's Mad Money, he said ServiceNow's agreements have become longer as enterprises increase investment in AI-powered workflows.
The CEO also addressed concerns over AI safety following reports that an OpenAI (OPENAI) agent breached a controlled testing environment during a cybersecurity evaluation. McDermott said ServiceNow's AI Control Tower is designed to monitor, manage, and secure AI agents, adding that the platform includes safeguards intended to stop malfunctioning or unauthorized AI behavior before it spreads.
McDermott said broader adoption of AI is likely to increase demand for ServiceNow's software as businesses require additional tools to manage growing numbers of AI agents and related incidents. He said the company expects rising AI workloads to support future growth, a view reflected in its higher full-year guidance. Despite the after-hours rally, ServiceNow shares remain down more than 38% this year.