Moody’s Ratings Upgrades ServiceNow (NOW) Long-term Issuer Rating and Senior Unsecured Notes Rating

ServiceNow, Inc. (NYSE:NOW) is one of the Top 10 Stocks to Buy According to Lakehouse Capital. Moody’s Ratings upgraded the company’s long-term issuer rating and senior unsecured notes rating to A2 from A3, while maintaining a positive ratings outlook. The upgrade and the positive outlook come off the back of ServiceNow, Inc. (NYSE:NOW)’s strong growth fueled by product innovation and increasing profitability, which can continue to strengthen its financial profile.

Moody’s Ratings Upgrades ServiceNow (NOW) Long-term Issuer Rating and Senior Unsecured Notes Rating

A software engineer at work, surrounded by a wall of computer monitors connected to a ‘Data Cloud’ platform.

ServiceNow, Inc. (NYSE:NOW) possesses a strong track record of expanding addressable markets through extending success in the service desk into broader IT workflows and non-IT business workflows, added Raj Joshi (Moody’s Ratings Senior Vice President). The firm expects ServiceNow, Inc. (NYSE:NOW)’s revenues to increase by ~20% to $13 billion in 2025. Furthermore, despite the large scale, the firm sees similar growth rates over the upcoming 2 – 3 years. It also expects its FCF to surpass $4 billion and $5 billion in 2025 and 2026, respectively.

Parnassus Investments, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:

“We initiated two positions in the Information Technology sector during the quarter: Advanced Micro Devices, a manufacturer of semiconductor devices and electronic components, and ServiceNow, Inc. (NYSE:NOW), which provides software for automating enterprise workflows, after significant share price drawdowns in both cases. As a result of these additions, our underweight in the sector lessened, and our positioning is closer to market weight.

ServiceNow’s product innovation and its ability to streamline and automate complex workflow across functions enable the company to sustain sales growth. Its wide moat, characterized by high switching costs and deep integration into critical enterprise functions, further cements the company’s long-term competitiveness. Market selloffs provided an opportunity to access one of the highest-quality software companies that is reshaping enterprise operations worldwide.”

While we acknowledge the potential of NOW to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NOW and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.