ServiceNow Gets a Price Target Raise. Why It’s an AI Winner with Nvidia.

“More code, more apps and more data will give way to increased requirements for [software] solutions,” he wrote. “This could provide an increasing wave of demand, resulting in a multi-year positive demand cycle for our universe.”

In Friday trading, ServiceNow stock was up 0.8% to $539.53.

Generative AI has been a popular investment theme as interest in the topic has taken off following OpenAI’s release of ChatGPT last year. The technology ingests text, images, and videos in a brute-force manner to create content. Chatbots like ChatGPT use a language model that generates humanlike responses, or their best guesses, based on word relationships found by digesting what has previously been written.

Last month, chip maker

Nvidia

(NVDA) and ServiceNow announced a partnership to develop generative-AI technology for corporations. The two companies will work together to develop custom large-language models to extend AI functionality to new uses across the enterprise—including for IT departments, customer service, and human resources.

For example, a ServiceNow customer could use the AI models to help summarize and do data entry on customer-service tickets, which currently take an average of seven to eight minutes per call. Agents can then use the time savings to work on more complex problems, the companies said.

On the chip maker’s earnings call in late May a week after the partnership announcement,

Nvidia

CEO Jensen Huang repeatedly expressed enthusiasm over his company’s deal with ServiceNow, saying it was a great example of using generative AI capabilities to serve corporate customers in a smart way.

Write to Tae Kim at [email protected]