ServiceNow CEO Bill McDermott’s bullish call on the company’s stock in April 2025 is becoming increasingly prescient, with shares rising dramatically from such low levels which had fired his spirits.
In a Bloomberg interview about ServiceNow’s first-quarter 2025 earnings, McDermott said the market setup was “the best entry point that I could ever imagine for this stock.” Investors had already begun to be concerned about the impact of artificial intelligence on traditional enterprise software companies.
Since then, ServiceNow shares have shown a big recovery, with the stock up around 70 percent from the April 2025 level that you refer to.
McDermott’s conviction was significant because ServiceNow was at the time seeing a lot of skepticism regarding it. Investors were wondering whether AI agents could erode the demand for traditional software platforms. The software industry as a whole was under pressure too, with markets beginning to reassess the long-term value of subscription-based enterprise applications.
ServiceNow’s subsequent results have provided a bit of comfort to the CEO. The company has continued to report strong subscription expansion and aggressively grow its artificial intelligence capabilities. Its Now Assist platform has been integral to the company’s strategy as ServiceNow tries to be an enterprise platform for agentic AI and automated workflows.
The company’s Q1 2026 results made clear that the underlying business is still strong. ServiceNow’s subscription revenue was up 22% year-on-year at about $3.67 billion. However, the stock fell sharply after the results as investors turned to margin pressure, deal delays from geopolitical situations, and concern about the narrative of AI disruption in general.
That volatility is why McDermott’s April 2025 comments were so interesting. His argument was essentially that the market had gotten too pessimistic about ServiceNow’s long-term prospects. Rather than consider AI as a threat, management has been positioning the technology as a huge growth opportunity for the company’s workflow platform.
As ServiceNow's AI business has grown, the thesis has gained further traction. It forecast that AI-related sales will be $1.5 billion in 2026, and that Now Assist will have more than $1 million in annual contract value for customers.
The stock’s recovery has also coincided with management’s confidence in capital allocation. McDermott personally bought about $3 million in ServiceNow shares in February 2026 - more than 28,000 shares at an average of $105 - and was widely viewed as another signal of management’s confidence in the company’s long-term valuation.
ServiceNow’s story, however, is not without its risks. The company is still under attack from heavy competition, enterprise software spending is changing, and AI agents are not well understood in the software industry. Valuation is also important now, considering the strong recovery in the stock.
But the contrast between investor sentiment in April 2025 and the company’s position today shows how to look beyond short-term market pessimism. McDermott saw an opportunity when investors were heavily discounting the stock amid fears of an AI-driven software disruption.
As ServiceNow continues to invest heavily in AI and enterprise automation, the market is now evaluating whether the company's platform can become one of the central infrastructure layers for the emerging agentic AI economy.
When investors look back on McDermott’s April 2025 statement, the subsequent rally is a reminder of just how quickly sentiment can change around a high-quality technology company when business fundamentals start to turn out to be better than the bearish narrative.
This article is for informational purposes only and is not investment advice.
Comments
Please to leave a comment on this article.