A Bank of America analyst says ServiceNow (NOW) has cracked the code on turning artificial intelligence into actual revenue growth, while noting that Microsoft’s (MSFT) AI strategy is being widely misread by investors who think it is trying to compete head-to-head with frontier model makers.
In a new CNBC interview, Bank of America analyst Tal Liani says the bank has reinstated ServiceNow as a buy with a $130 price target, arguing that the company has the right portfolio to turn AI into a genuine growth engine at a moment when most software companies are still figuring out how.
Liani says the question investors should be asking is not whether AI will replace these companies but whether they can use AI to grow.
“When you deploy agents, when you deploy AI, you still need to govern, to route, to audit the trail. And you need to deploy AI in a responsible way. And ServiceNow is so embedded in the workflow that now that they have the right portfolio to address AI, they could actually turn it into revenue growth. You can see it in the numbers. The company is growing about 20%.”
As of Monday’s close, NOW is trading at $103.
Looking at Microsoft, Liani says investors are fundamentally misunderstanding what the company is trying to do in the AI space.
“What Microsoft is trying to do is to give you a layer of AI, whether behind it you have Gemini or Anthropic or OpenAI, it does not matter. They will give you the best answer from all the LLMs, all the models that are existing. I’m not expecting them to be a standalone LLM and compete with Gemini. That’s not the issue.”
Liani says Microsoft’s real strategy is to leverage its deeply entrenched position inside the enterprise and grow within the office suite, and on that measure, the company is executing well.
“I think that Microsoft, within its target market, is doing a great job. They’re going in the right direction.”
Microsoft is currently valued at $423 per share.
Photo by Ed Hardie on Unsplash
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