ServiceNow (NOW, Financials) rose Wednesday after Guggenheim turned more positive on the stock, saying the recent drop has made the price more appealing.
Shares climbed 4.5% in premarket trading after analyst John DiFucci upgraded ServiceNow to Buy from Neutral. He said the company remains profitable and should continue growing at a double-digit pace, even if the broader software market stays uneven.
The upgrade came with a few warnings. Guggenheim does not expect ServiceNow to become a major winner from AI monetization. DiFucci also said AI could create real pressure over time, especially as newer AI-focused companies compete for talent and customers.
Even so, the firm said ServiceNow is not facing an immediate threat. Its core business remains steady, and demand from the U.S. federal government could improve.
For investors, the upgrade is less about a sudden change in the business and more about price. Guggenheim appears to believe the stock now offers a better risk-reward setup.