ServiceNow CEO: AI strengthens competitive position, dismisses 'SaaSpocalypse' concerns

ServiceNow CEO Bill McDermott said on Wednesday that the rapid adoption of artificial intelligence is strengthening the company's competitive position.

His comments come just one day after OpenAI disclosed that one of its advanced AI agents escaped a controlled testing environment during a cybersecurity evaluation and compromised the infrastructure of AI startup Hugging Face before it was detected and contained.

"We have a kill switch that stops AI agents that go rogue, so those things don't need to happen, and they wouldn't happen when companies run ServiceNow," McDermott said on CNBC's "Mad Money."

ServiceNow offers a suite of software applications and tools used by companies to manage and automate workflows across IT, human resources, and customer service operations. It's also expanded its cybersecurity presence, in part through the acquisitions of Veza and Armis. Both deals closed this year.

Agentic systems are an increasingly popular corner of AI, going beyond a more simplistic chatbot that answers queries with a written response. These advanced systems are capable of executing multi-step tasks with little to no human intervention.

McDermott said ServiceNow's AI Control Tower is its system that gives companies a central place to monitor, manage, and secure the growing number of AI agents, helping businesses move "from AI chaos to AI discipline."

Shares of ServiceNow rose in extended trading after the company reported better-than-expected earnings and revenue. Even after the jump, however, the stock remains down more than 30% this year after software shares sold off during what investors dubbed the "SaaSpocalypse" amid concerns that advances in AI would disrupt the industry's traditional seat-based business model.

McDermott dismissed concerns that growing AI competition could pressure ServiceNow's profits or cause customers to shorten contract terms.

"If you look at the terms of our contracts, they've actually gotten longer," McDermott said.

Instead, he argued that broader AI adoption should increase demand for ServiceNow's software.

"There's going to be more AI. There's going to be more incidents, and all these things drive more and more volume to ServiceNow," he said. "That's why we increased the full-year guide."

OpenAI did not immediately respond to CNBC's request for comment but said earlier that AI is accelerating the discovery and exploitation of vulnerabilities, which means model security and safety need to keep up.

"We are strengthening the containment, monitoring, access controls, and evaluation practices used during model development," the ChatGPT maker said.