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Guggenheim Just Raised Its ServiceNow Price Target by 40% as AI Demand Builds Summary

Guggenheim raised its ServiceNow price target to $175, citing steady customer demand and the potential for the software company to beat quarterly expectations

ServiceNow (NOW) received a higher valuation assessment from Guggenheim, which raised its price target to $175 from $125 and retained a Buy rating. The new objective relies on a valuation of roughly 10.5 times projected recurring revenue.

Feedback from five partners suggests customers are continuing to spend on ServiceNow's software, although demand has not broadly accelerated. One partner described business as better than anticipated, while four reported performance close to their expectations. Guggenheim believes this environment supports the company's prospects for meeting third-quarter estimates for growth in contracted work awaiting revenue recognition.

The brokerage also sees the company's core IT service-management business supporting sales momentum. Its partners reported healthy pipelines, while Guggenheim expects management's guidance for the following quarter to be at least in line with market forecasts.

ServiceNow's strategy of incorporating artificial intelligence features into product packages has received differing reactions. Some partners observed increased usage and said customers were finding it easier to assess potential returns. Others said the new pricing structure had caused dissatisfaction among buyers. Overall adoption of AI offerings remains at an early stage, though two partners reported growing interest in AI Control Tower.

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

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In its upcoming report, ServiceNow (NOW - Free Report) is predicted by Wall Street analysts to post quarterly earnings of $1.02 per share, reflecting an increase of 6.3% compared to the same period last year. Revenues are forecasted to be $4.09 billion, representing a year-over-year increase of 20%.

The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe.

Prior to a company's earnings announcement, it is crucial to consider revisions to earnings estimates. This serves as a significant indicator for predicting potential investor actions regarding the stock. Empirical research has consistently demonstrated a robust correlation between trends in earnings estimate revision and the short-term price performance of a stock.

While investors typically use consensus earnings and revenue estimates as a yardstick to evaluate the company's quarterly performance, scrutinizing analysts' projections for some of the company's key metrics can offer a more comprehensive perspective.

Bearing this in mind, let's now explore the average estimates of specific ServiceNow metrics that are commonly monitored and projected by Wall Street analysts.

The combined assessment of analysts suggests that 'Revenues- Professional services and other' will likely reach $113.57 million. The estimate points to a change of +5.2% from the year-ago quarter.

According to the collective judgment of analysts, 'Revenues- Subscription' should come in at $3.98 billion. The estimate indicates a year-over-year change of +20.6%.

Analysts expect 'Current Remaining Performance Obligations(cRPO) - GAAP' to come in at $13.56 billion. Compared to the current estimate, the company reported $11.35 billion in the same quarter of the previous year.

Analysts predict that the 'Remaining Performance Obligations (RPO) - GAAP' will reach $29.32 billion. The estimate is in contrast to the year-ago figure of $24.30 billion.

The consensus estimate for 'Gross Profit (Non-GAAP)- Subscription' stands at $3.21 billion. The estimate compares to the year-ago value of $2.74 billion.

It is projected by analysts that the 'Gross Profit (Non-GAAP)- Professional services and other' will reach $6.03 million. The estimate compares to the year-ago value of $12.00 million.

View all Key Company Metrics for ServiceNow here>>>

Shares of ServiceNow have experienced a change of +14% in the past month compared to the -1.2% move of the Zacks S&P 500 composite. With a Zacks Rank #5 (Strong Sell), NOW is expected to underperform the overall market in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

ServiceNow's AI business just crossed a major milestone while the stock still sits nearly 20% below where it traded a year ago, and one analyst on Wall Street sees an opportunity the rest of the market is ignoring.

ServiceNow (NYSE:NOW | NOW Price Prediction) currently trades at $145.33. The average analyst price target is $152.23, which implies 4.7% upside.

ServiceNow sells a cloud platform that automates IT, HR, security and customer workflows, and it now positions itself as the “AI control tower” for large enterprises. Investors are watching because the AI revenue is real: ServiceNow AI crossed $1 billion in annual contract value, and agentic deployments rose 9x in 9 months.

The bigger gap comes from the high end of the Street. Bernstein’s Peter Weed holds an Outperform rating with a $248 target, the highest published. That implies 70.6% upside, a sharp break from where the market prices the stock.

AI Disruption Fears Cut ServiceNow by 58% From Its High
Fear that AI agents would make seat-based software obsolete did most of the damage. Shares fell from a 52-week high of $192.97 to a low of $81.24. That marks a decline of 57.9%. Software stocks entered a bear market in January, and ServiceNow plunged 10% in one session. The sector lost $1 trillion in a week.

ServiceNow added problems of its own. The stock tumbled nearly 15% after management warned that delayed Middle East deals would hit first-quarter subscription growth. Profit also took a hit: second-quarter operating income fell 54.75% to $162M as stock compensation and costs from the Moveworks, Veza and Armis deals piled up. The stock has since climbed 78.9% off its low, yet it is still down 19.58% over the past year.

Bernstein Says the Market Is Underpricing an AI Monetization Engine
Weed’s thesis has three parts. First, Now Assist premium levels expand contract value across existing seats, so AI revenue increases without long new sales cycles. Second, ServiceNow is the default coordination layer for IT, HR and customer workflows. Third, operating leverage should support strong free cash flow margins as subscriptions scale (per Bernstein).

The latest quarter supports that case. Revenue increases 24.0% to $3.987B, and EPS of $0.90 beat the $0.86 consensus, the company’s 4th consecutive beat. Current remaining performance obligations rose 21% to $13.20B, and deals above $1 million increases ~40%. Management’s 2030 targets include $30B+ in subscription revenue and 30% of ACV from AI.

Sentiment is generally positive, but most analysts are far less bullish than Weed. Of 49 analysts, 45 give the stock their top two ratings. Estimates have edged lower: the fiscal 2026 EPS average is at $4.0668, down from $4.1291 90 days ago, while fiscal 2027 stands at $5.0067. A price target is one analyst’s view, and it guarantees nothing.

Software Peers Fell Together, but Recovered Unevenly
The AI disruption trade hit the whole application software group, but each stock has recovered at its own pace.

Salesforce (NYSE:CRM) trades at $242.51. It is up 0.63% over the year but down 7.81% year to date. Its $285.68 consensus target implies 17.8% upside. 38 analysts rate it Buy or better, against 15 Holds.

Workday (NASDAQ:WDAY) trades at $195.20, down 16.67% over the year. Its $207.92 target implies 6.5% upside, and opinion is split: 20 Buy ratings, 19 Holds and 3 Sells.

On consensus targets, Salesforce offers the greatest potential gain among these names. ServiceNow’s case depends on whether Bernstein’s high-end view proves right.

ServiceNow Trails a Rising S&P 500
At $145.33, ServiceNow sits 4.7% below its $152.23 consensus target, based on 49 ratings. The stock is down 5.13% year to date and 19.58% over the year. Over the same periods, the S&P 500 rose 12.42% and 15.38%.

Strong Buy: 10
Buy: 35
Hold: 2
Sell: 1
Strong Sell: 1

Momentum is improving, with a one-month gain of 7.28%. The forward P/E of 28 is far below the trailing multiple of 89.

Why I Lean Bullish but Doubt the Full $248
ServiceNow deserves a closer look here if AI contract value keeps growing and margins rebound once Armis integration costs fade in FY27. But I’d stay cautious if growth slows faster than the guidance suggests. The third-quarter subscription growth guide of 20.5% already reflects federal revenue pulled forward into the second quarter, along with a $35 million currency drag to remaining performance obligations.

I lean bullish. Growth above 20% at 28 times forward earnings looks reasonable for a business that is winning large customers. Still, the consensus target is a more realistic 12-month marker than the 70% call.

Contact [email protected] for any questions or corrections.

SANTA CLARA, Calif.--(BUSINESS WIRE)--ServiceNow (NYSE: NOW), the Super Intelligence Control Tower for business reinvention, today announced major advances to ServiceNow EmployeeWorks that give employees the ability to build the AI agents their jobs demand. These agents can complete daily tasks without human intervention and enable deep persona-based work across critical business functions. Additionally, ToolSmith, a new agentic developer environment for ServiceNow EmployeeWorks, takes complex tool-building from days to minutes, securely and at enterprise scale.

ServiceNow EmployeeWorks is powered by a third-generation employee-centric AI harness, which provides employees with intelligent context, trusted decision making, and robust enterprise actions to orchestrate AI safely.

Employees build AI without code, powered by an employee-centric AI harness

While enterprise AI investment is rising, most employees still can't build the AI their job needs. IT backlogs, developer constraints, vendor lock-in, and fragmented tools mean that the people closest to the work—the ones who understand the problems best—can’t build AI solutions that take secure actions. ServiceNow EmployeeWorks helps change that.

"AI's real promise is to close the gap between intention and action,” said Jacqui Canney, chief people and AI enablement officer, ServiceNow. “This era demands that business leaders redesign work around their customers’ needs. When your technology supports that goal, your employees spend less time on coordination and more time solving customer problems that require human judgement. ServiceNow EmployeeWorks makes that shift possible."

“ServiceNow combines agentic planning with governed and auditable workflows for any employee use case with intelligent employee context as the foundation,” said Bhavin Shah, senior vice president, employee experience group, ServiceNow. “The result is an operating system for the employee experience, connecting employees to the full power of the ServiceNow AI platform across any business application or channel, in any language, which can be ready for the enterprise on day one.”

Productivity Assistants: AI assistants for contextual persona-based work

Productivity Assistants are specialized AI assistants for contextual, nuanced, or persona-based work. These assistants run on the third-generation employee-centric AI harness, which combines reasoning, memory, and tool interoperability, so assistants can own deep research, long-running tasks, and cross-system and agent work with durable memory.

Non-coding employees can easily build the Productivity Assistants they need with admin-defined guardrails. They can tailor behavior, content, tools, and access. Pre-built assistants are also available.

HR Service Delivery: Productivity Assistants will be available for different ServiceNow products, starting with HR Service Delivery, extending service directly to managers for HR, talent, growth, and hiring.

Talent Insights Assistant surfaces candidate fit, hiring, and organizational talent insights directly to managers, powered by integrations with Findem and Phenom. HR Business Partner Assistant handles HR needs, including approvals, case management, and employee programs, conversationally. HRBP Assistant acts as a digital twin to help scale HR teams. Manager Assistant equips managers with timely coaching, insights, and team-performance visibility, unlocking information and capabilities that normally sit behind HR people and process. ServiceNow EmployeeWorks: Two foundational productivity assistants are available out of the box, with the option to build more.

Research Assistant investigates complex questions across internal and external sources in real time, delivering personalized answers based on role and access through a rich artifact, document, or deck. Calendaring Assistant integrates directly with calendar systems, serving as a smart scheduler that can decipher complex calendars, resolve conflicts, reserve rooms, add conferencing links, and more. It goes beyond typical calendar booking solutions by orchestrating nuanced requests like scheduling quarterly one-on-ones with an entire team on days that minimize disruption to project work or finding the least hectic day to bring together a team for a full day workshop. Productivity Routines: Employees build their own agents for proactive work

For work that's predictable and repeatable, employees can now build and deploy Productivity Routines that run proactively in the background, helping eliminate the need to manually repeat the same tasks continuously. They execute the same steps every time and deliver finished outcomes without human intervention.

For example, a sales leader can build a Prospecting Agent that can scan their calendar for upcoming account meetings, research the account via internal and external resources, and assemble a tailored asset or pitch that marries the company’s value props to the problems and pains experienced by the prospect – all before they sign on for the day.

Employees don't need to understand backend systems, API integrations, or data models. They describe what they want to automate, select the tools they need, and deploy. This democratizes AI, shifting the power to automate from IT and into the hands of the people who understand the work best, with governance built in.

ToolSmith: Developers vibe code enterprise-grade AI tools in minutes

ToolSmith is a new agentic developer environment that builds any automation for ServiceNow EmployeeWorks AI assistants. Developers describe what they want to accomplish in natural language, and ToolSmith handles the end-to-end build of the tool. ToolSmith is trained on over 75,000 APIs. It aligns on a plan with developers, implements integrations following the best practices, and builds tools for AI agents that are optimized for token efficiency and reliability. If something breaks, it can pull the relevant logs and propose a fix. Developers can then test and refine all through the same conversational experience.

ToolSmith also identifies what to build next. It scans through logs to identify opportunities to fix, improve, or invent the next best workflow. What used to take weeks, now takes minutes.

Conversations API: ServiceNow EmployeeWorks everywhere employees work

With the new Conversations API, organizations can bring ServiceNow EmployeeWorks capabilities – including Productivity Assistants, Productivity Routines, and ToolSmith - directly into the tools employees already use, including custom internal applications, kiosks, and other AI applications.

One unified platform, available across every channel, with no rearchitecting required.

What customers and partners are saying:

Salvation Army Australia

"For an organisation built on human connection, our frontline workers shouldn’t be navigating fragmented systems," said Milad Kruze, chief information officer for The Salvation Army Australia. "We wanted a solution woven into the ecosystems we already use, and the ServiceNow AI Platform was already part of our digital spine. Now our AI specialist, ‘Goldie,’ resolves nine out of ten questions without escalation and has given more than 5,000 hours back to our people."

INRY, a Cprime Company

"Replacing a legacy portal with one conversational front door completely changed how our people get work done day to day," said Matt Robinett, vice president and ServiceNow practice lead at INRY, a Cprime Company. "ServiceNow EmployeeWorks cut our internal request submission times by 60% and gave us a 97% completion rate, all while eliminating the need to switch between applications entirely. As both a ServiceNow customer and a partner, we're looking forward to using these new tools to extend that same impact even further across our organization and to our clients.”

Availability:

Productivity Assistants, Productivity Routines, the employee-centric harness, ToolSmith and Conversations API are all in controlled availability today.

Additional Information:

Learn more about ToolSmith and other ServiceNow developer tools at now[dev]26 from November 4-5. Craft real solutions alongside the engineers and product experts who built the platform.

About ServiceNow

ServiceNow (NYSE: NOW) is the Super Intelligence Control Tower for business reinvention. The ServiceNow platform integrates with any model, any cloud, and any data source to orchestrate, govern, and secure work across the agentic enterprise. ServiceNow gives customers the enterprise context and control to build and scale confidently. With more than 100 billion workflows running on the platform each year, ServiceNow helps organizations turn fragmented operations into coordinated, autonomous work for IT, CRM, Security, Employee Experience, and more. Learn how ServiceNow puts AI to work for people at www.servicenow.com.

Forward Looking Statements

This press release contains “forward-looking statements” about the expectations, beliefs, plans, and intentions relating to ServiceNow EmployeeWorks and related offerings and capabilities. Such statements include statements regarding future product capabilities and offerings and expected benefits to ServiceNow. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, ServiceNow’s results could differ materially from the results expressed or implied by the forward-looking statements made. ServiceNow undertakes no obligation, and does not intend to update the forward-looking statements. Factors that may cause actual results to differ materially from those in any forward-looking statements include: (i) delays and unexpected difficulties and expenses in executing the product capabilities and offerings, (ii) changes in the regulatory landscape related to AI and (iii) uncertainty as to whether sales will justify the investments in the product capabilities and offerings. Further information on factors that could affect ServiceNow’s financial and other results is included in the filings ServiceNow makes with the Securities and Exchange Commission from time to time.

More News From ServiceNow

15.10.2026 17:33, NOW

Softwarová společnost ServiceNow, která pomáhá firmám automatizovat a digitalizovat pracovní postupy napříč celou organizací, představila nový nástroj AI Passport, který ověřuje rozsah oprávnění AI agentů. Firma tím rozšiřuje svůj provozní rámec pro správu podnikové AI.

AI Passport funguje jako kryptograficky podepsaný certifikát, který v reálném čase vymezuje, k čemu mají AI agenti přístup a co smějí dělat. Pokud agent jedná mimo svá oprávnění, nástroj ho může přesměrovat, omezit, nebo v případě potřeby úplně ukončit. ServiceNow tento přístup popisuje jako posun od reakce k prevenci. Místo zpětného dohledávání v auditních záznamech má nástroj zabránit nepovoleným akcím už za běhu. Přínosný má být hlavně u externích AI agentů, u nichž se firma nemusí spoléhat na to, co agent o svých oprávněních sám tvrdí.

Partnerem pro návrh a uvedení řešení na trh je NVIDIA. Ve spolupráci s její platformou Open Agent Safety Platform vyvíjí ServiceNow implementaci připravenou pro ostrý provoz. AI Passport by měl být dostupný ve 4Q 2026.

Vývoj akcie Akcie společnosti ServiceNow (NOW) posilují o 5,61 % na 147,83 USD.

Zdroj: ServiceNow, Bloomberg

Michal Bárta
Fio banka, a.s.
Prohlášení

ServiceNow Inc. (NYSE:NOW) could see revenue growth accelerate into fiscal 2027 as its core business stabilizes and AI, security and usage-based products become larger contributors.

BNP Paribas analyst Stefan Slowinski raised his price forecast on ServiceNow by 14% to $160 from a prior level implied by the increase, representing 14% upside from the Oct. 8 price of $139.80. He maintains an Outperform rating.

ServiceNow Subscription Growth Could AccelerateSlowinski said ServiceNow’s current remaining contract value and subscription revenue growth have stabilized, with potential for faster growth ahead.

The company’s raised fiscal 2026 guidance implies organic subscription growth of about 19% through year-end. BNP Paribas also estimates underlying current remaining performance obligation growth at roughly 19%.

Slowinski expects softer U.S. federal comparisons in the third and fourth quarters, improving federal demand and rising AI revenue to support growth.

He estimates AI revenue could represent about 9% of group annual recurring revenue by year-end.

For fiscal 2027, BNP Paribas models subscription revenue growth 120 basis points above consensus and expects about 90 basis points of acceleration through the year.

Security Emerges As A Bigger Growth DriverSlowinski also sees cybersecurity becoming a more important part of ServiceNow’s business.

He estimates the company’s Security and Risk operations could generate about $1.5 billion in annual contract value, equal to roughly 10% of group ACV, while growing 30%-40%.

He expects the broader security business to become an organic growth driver by mid-fiscal 2027, with Armis contributing organically starting in the second quarter of 2027.

CEO Bill McDermott has said Risk and Security could become ServiceNow’s largest business by the early 2030s, surpassing Technology Workflows.

Slowinski estimates the security business could account for about 10% of revenue in 2027.

Valuation Supports Higher ForecastBNP Paribas values ServiceNow using a 75/25 weighting between fiscal 2028 enterprise value-to-sales of 8 times and enterprise value-to-EBITA of 21 times, discounted back to the present.

Slowinski said the ex-security business trades at about 5.8 times enterprise value-to-sales.

He now views ServiceNow as one of BNP Paribas’ top sector picks, citing improving growth prospects, AI monetization, security expansion and continued margin improvement.

ServiceNow Price ActionNOW Price Action: ServiceNow shares were up 1.72% at $142.74 at the time of publication on Tuesday, according to Benzinga Pro data.

Photo via Shutterstock

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© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

ServiceNow, Inc. (NYSE:NOW) drew bullish analyst commentary Monday as analysts pointed to strong enterprise AI demand, federal spending, and cybersecurity opportunities ahead of its third-quarter earnings on Oct. 28.

Analysts expect earnings per share of $1.03, up from 96 cents a year earlier, and revenue of $4.09 billion, compared with $3.41 billion in the prior-year period.

The stock carries a Buy rating with an average price forecast of $148.93. Recent analyst moves include:

RBC Capital analyst Matthew Hedberg maintained an Outperform rating and raised the price forecast from $130 to $176 on Monday.
BTIG analyst Allan Verkhovski reiterated a Buy rating and maintained a price forecast of $170 on Monday.
Argus Research analyst Joseph Bonner kept a Buy rating and boosted the price forecast from $134 to $170 on Friday.
RBC Expects Earnings Beat, Sees AI and Federal Demand Supporting GrowthRBC Capital analyst Matthew Hedberg expects ServiceNow to beat expectations and incorporate more of the upside into its calendar-year 2026 estimates than it did last quarter.

Hedberg cited enterprise AI demand, strength in U.S. federal spending and a growing deal pipeline as positives.

The analyst also sees cybersecurity as an expanding growth opportunity, with ServiceNow positioned to monetize AI, consolidate customer spending and raise guidance toward year-end.

While the analyst does not expect customers to buy additional Now Assist packs, he sees the roughly 30% annual contract value (ACV) uplift from Pro Plus remaining stable.

Key areas to watch on the earnings call include federal contract execution and seasonality, progress toward the $1.5 billion AI ACV target, cybersecurity momentum and cross-selling of core ITSM, ITOM and CMDB products following acquisitions.

Other areas of focus include adoption of Flow, a conversational AI-native service desk designed to expand ServiceNow’s reach across the Fortune 500 and support future product sales, as well as gross margins amid changes in consumption mix and hyperscaler growth, Hedberg added.

BTIG Sees AI Opportunity As UnderappreciatedBTIG analyst Allan Verkhovski views ServiceNow’s AI opportunity as underappreciated. He projects 22.0% constant-currency current remaining performance obligations (cRPO) growth in the third quarter, while fourth-quarter guidance could reach 20.0%, above management’s 19.5% baseline.

Verkhovski also sees potential for the company to beat and raise subscription revenue estimates, supported by U.S. Federal demand, easier year-over-year comparisons and Armis’ fourth-quarter contribution.

U.S. Federal contract renewals and upgrades to the Advanced pricing tier are key areas to watch following the July 1 end of sales for legacy tiers, he added.

AI Control Tower, AI Workflow Factory and Autonomous Engineer could support further AI adoption as enterprises focus on automation, data sovereignty and security. However, budget constraints, seat optimization and return-on-investment scrutiny remain challenges among SMB and mid-market customers, Verkhovski noted.

NOW Price Action: ServiceNow shares were up 0.24% at $141.19 at the time of publication on Monday, according to Benzinga Pro data.

Photo via Shutterstock 

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© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

A couple of analysts raised the price forecasts for ServiceNow (NYSE:NOW) on Tuesday. Stifel analyst Brad Reback raised the price forecast from $120 to $160, while maintaining a Buy rating. UBS analyst Karl Keirstead kept a Neutral rating and raised the price forecast from $110 to $150.

• What’s the outlook for NOW shares?

Enterprise Spending to Show Modest ImprovementStifel analyst noted that ServiceNow’s enterprise spending environment is showing a modest sequential improvement, supported by elevated deal activity, solid renewal momentum and increasing adoption of Advanced SKUs.

However, some customers remain uncertain about the company’s AI-enabled products and pricing structure, adds the analyst.

The analyst writes that early indicators also suggest that consumption trends are gaining momentum, broadly consistent with management’s expectations.

Non-Defense Business Remains FlattishU.S. non-Department of Defense federal business appears to have been roughly flat year over year in the third quarter, despite a challenging comparison and volatility related to the renewal timing of a large VA contract, adds the analyst.

Although the renewal could temporarily pressure U.S. federal performance, the analyst projects the impact to be more than offset by a nine-figure UK public-sector contract win.

Analyst Expects Management to Give Conservative OutlookOverall, fourth-quarter upside is expected to be at least in line with the approximately 200-basis-point upside delivered in the second quarter. Reported cRPO growth stood at 22% year over year on a constant-currency basis, compared with guidance of approximately 20%.

Looking ahead, despite positive commentary around the pipeline and an easier federal comparison in the fourth quarter, the analyst expects management to remain conservative in its outlook.

Fourth-quarter 2026 cRPO guidance is expected to be broadly aligned with Street expectations of 19.5% reported year-over-year constant-currency growth, adds the analyst.

AI Workflow Factory & Autonomous Engineer Solutions In IndiaServiceNow also disclosed on Tuesday its AI Workflow Factory and Autonomous Engineer solutions designed to identify opportunities for AI-driven improvements and provide a unified platform to build, operate and expand AI workflows across enterprises.

The solutions aim to help businesses scale operations in days rather than months while maintaining governance through ServiceNow’s AI Control Tower. The announcement also highlights India as a key market for enterprise-wide, governed AI transformation.

ServiceNow’s Indian partner ecosystem is adopting AI Workflow Factory and new developer capabilities, including unattended coding for autonomous planning, development and testing through Autonomous Engineer.

Read Next

NOW Stock Price Activity: ServiceNow shares were up 0.81% at $137.19 at the time of publication on Tuesday.

Photo via Shutterstock 

© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

ServiceNow has shed a quarter of its value while software stocks bleed out across the sector, yet one Wall Street analyst just slapped an outlier target on it that implies an 82% surge from here. The bull case and the…

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ServiceNow (NYSE:NOW | NOW Price Prediction) currently trades at $136.11, and Wall Street’s average analyst price target is $144.99. That puts the stock about 6.5% below consensus.

ServiceNow runs the Now Platform, enterprise workflow and AI orchestration software that management sells as the “AI Control Tower for business reinvention.” The consensus gap is small, while the top of the range sits far higher. Bernstein’s Peter Weed holds the Street-high $248.00 target with an Outperform rating, and that target sits roughly 82% above the current price.

Investors now weigh whether generative AI turns ServiceNow into a software winner or another casualty of the selloff in software stocks.

An 82% Street-High Target on a Software Stock Down 25% Reported profits fell hard as ServiceNow kept buying companies, and that drove the decline. Second-quarter operating income dropped 54.75% year over year to $162 million. GAAP subscription gross margin fell to 73.5%, down from 80%. Three things caused it: amortization tied to the Armis and Veza deals, rising stock-based compensation, and business-combination costs.

Shares are down 25.41% over the past year and sit about 29.5% below the 52-week high of $192.97. Part of that is sector-wide: investors have rotated out of high-multiple software on fears that generative AI commoditizes SaaS. Estimates also fell. Over the trailing 30 days, analysts made 35 down revisions to third-quarter EPS and only 3 upward ones. Some U.S. federal revenue moved from Q3 into Q2, which makes the third quarter a harder comparison.

AI Contract Value Just Topped $1 Billion, Which Keeps Bulls on Board Analysts are largely positive: 10 assign the top rating, 35 recommend buying, 2 say hold, 1 say sell and 1 assign the lowest rating. Bernstein’s thesis rests on three things. First, ServiceNow can make money from generative AI copilots in IT, customer service and HR workflows. Second, CIOs will move more of their software onto one platform. Third, 20%+ ACV growth can come with wider margins.

The latest quarter supports that case. ServiceNow AI annual contract value exceeded a billion, and management says it is on track to beat its one and a half billion ACV by the end of 2026 target. Customers running agentic AI in production grew 9x over the last nine months. Deals worth more than $1 million in net new ACV reached 123, and cRPO rose 21% to $13.20B.

Management raised full-year subscription revenue guidance to $15,760–$15,780 million. By 2030, it targets $30.00 billion or more in subscription revenue, with AI making up 30% of ACV. Revisions to 2027 EPS are close to even, with 18 upward moves in seven days and 19 cuts over 30 days.

There is reason for doubt. The 2026 EPS consensus has fallen to $4.0667 from $4.1230 90 days ago. Bernstein’s target is also an outlier that sits well above the consensus.

Salesforce Offers More Consensus Upside Than ServiceNow The whole peer group sold off alongside ServiceNow.

Salesforce (NYSE:CRM) is down 12.65% year to date and 11.2% over the past month. Trading at $229.79 versus a $283.36 average target, it has about 23.3% implied upside. Of 55 analysts, 38 rate it Buy or better and 15 rate it Hold.

Workday (NASDAQ:WDAY) is down 20.09% over one year. Trading at $188.96 versus a $208.26 target, it has about 10.2% upside. Analysts are split, with 19 Holds against 20 Buy-or-better ratings.

Salesforce has the most upside to its consensus target, with ServiceNow last of the three. ServiceNow’s appeal comes from its high-end targets.

ServiceNow Trails the S&P 500 by a Wide Margin This Year ServiceNow is down 11.15% year to date while the S&P 500 is up 13.63%. Over one year, the stock has lost 25.41% as the index gained 15.79%.

Across 49 analysts, the average target of $144.99 implies just 6.5% upside. The stock trades at 28x forward earnings versus 86x trailing. Targets reflect analyst opinions and can change.

I Lean Bullish on ServiceNow, With Margins as the Tripwire If AI ACV keeps growing toward the one and a half billion goal and operating margin reaches the guided 31.5%, the optimistic scenario gains traction. Risks mount if Armis integration costs keep eating into GAAP profits, or if the federal pull-forward produces a weak Q3.

Revenue still growing 24.0% at 28x forward earnings is a combination worth researching further. The $248.00 target needs everything to go right. Consensus is the more realistic anchor.

Contact [email protected] for any questions or corrections.

SANTA CLARA, Calif.--(BUSINESS WIRE)--ServiceNow, the Super Intelligence Control Tower for business reinvention, today launched Flow by ServiceNow, a new conversational AI-native service desk built for teams reimagining the way they deploy ITSM for the AI era. It is available to any organization where speed and simplicity matter most, whether it’s a small team or an enterprise. Flow can be deployed instantly and be up and running in a day, with no implementation project and no infrastructure required. It helps resolve employee issues and requests through conversations in the chat channels teams already use. Flow delivers the speed organizations want, with instant answers and resolutions all grounded in ServiceNow's leadership in workflow automation and innovation.

Flow is for companies that want to work in a completely new way. It’s automation built for speed and simplicity.

Share AI has changed expectations across the board, especially for those on the front lines in IT departments and DevOps organizations. New ways of working mean employees expect help in the conversations they're already having and get answers back the same way, not swivel to a different experience in a portal or ticketing system. Flow solves this by having the conversation act as the interface. Support happens where work happens, natively within chat channels.

At the same time, teams waste time solving the same problems repeatedly: password resets, access requests, policy questions, infrastructure provisioning. With Flow, when users resolve a request correctly, they can automate that workflow with a single click, eliminating repetition. Next time the issue comes up, Flow handles it automatically. No knowledge base articles needed. That's reliable results at AI speed.

"Flow is for companies that want to work in a completely new way. It’s automation built for speed and simplicity,” said Amit Zavery, president, chief operating officer, and chief product officer at ServiceNow. “We are meeting companies where their employees work every day—in conversational channels like Slack and Teams, and investing where we see AI-native market opportunities. With Flow, every organization can have intelligent automation designed for business reality, speed, and ease.”

How Flow works: sign up, go live, automate

With Flow, support happens where work happens, and the conversation becomes the interface. Flow is a new standalone product with faster deployment and the same reliable results expected from ServiceNow's comprehensive service management portfolio. Flow doesn't just answer repetitive requests. It closes them or automatically escalates if needed. This is how ServiceNow is transforming how work gets done: AI-native, conversational support, easy-to-build automations, beginning in ITSM and expanding across every team.

Flow requires no deployment, no infrastructure, and no employee training. As ways of working and workforce needs are changing with AI, Flow provides a clear entry point for conversational service desk support. New customers can buy and activate Flow directly, with no existing ServiceNow relationship or platform prerequisite. Flow can begin handling requests as soon as it goes live.

"Technology leaders today want simplicity. They want their teams empowered to solve problems quickly without adding complexity. The real value comes when those solutions can be easily automated and repeated at scale," said Stephen Elliot, group vice president, software development and IT operations, IDC. "By combining conversational experiences with accessible automation, organizations can shorten time-to-value, reduce manual effort, and deliver more consistent service outcomes."

ServiceNow's current customer base gains a new help desk experience too. Existing customers on AI-native SKUs can deploy Flow immediately at no additional procurement cost through consumption-based usage. Teams running full-scale ITSM deployments can also use Flow for specific departments, remote teams, or newly acquired business units that need rapid deployment or prefer a different operational model. No matter the company size, Flow brings teams online quickly, integrates into any existing knowledge, assets, ticketing, and AI usage, while giving confidence that everything is tied to the ServiceNow AI platform for auditability and governance when needed.

What customers are saying about Flow by ServiceNow:

CFO Advisors

"Our clients live in Slack with us, and we run dedicated company-to-company channels where we provide support in real time. With Flow, we can deliver instant help directly in the channels our clients already use, without the friction of switching tools. This lets us operationalize finance support more effectively across our entire customer base and create real leverage in how we deliver value."

— Alex Wu, Managing Partner, CFO Advisors

Fleet Numerical Meteorology and Oceanography Center (FNMOC), U.S. Navy

"Flow could help FNMOC cut through red tape and reduce reliance on informal, personality-based processes by enabling users to build workflows directly through Microsoft Teams. Rather than navigating layers of coordination or disconnected systems, using Flow, our teams could turn recurring needs into transparent, repeatable processes where the work already occurs. For smaller ServiceNow organizations, Flow offers a practical way to gain more value from the platform without the extensive resources of larger enterprises—especially in environments where systems and services are often siloed."

— Jeffery Compoc, Deputy N6, FNMOC, U.S. Navy

Serenity EHS, Inc.

“We're a small team building solutions on ServiceNow and moving fast every day. We want to maximize the time we spend solving customer needs and minimize how much effort we spend on internal IT, HR, and other operational tasks. In the past, we often had to search across numerous locations for answers. Flow turns all of our data into one conversational interface so our team asks for help in Slack and gets answers instantly. It's how we scale knowledge with a lean team.”

— Peter Oneppo, Co-founder & CEO, Serenity EHS, Inc.

VividCharts

"At VividCharts we're a lean team that moves fast, and people are constantly asking the same questions about our processes, our tools, and our history. Flow lets us turn that into a conversation instead of an email chain. Someone asks a question in Slack, Flow pulls answers from what we've already documented, and if it's something new, we escalate it and learn from it, and Flow automates it the next time. It's like having an organizational memory that actually works, which is something we didn't have before."

— Mitch Stutler, co-founder and CEO, VividCharts

Partners:

The launch of Flow opens new market segments for ServiceNow, also creating more opportunities for partners. ServiceNow partners get a way to acquire new customers in any industry, from the Fortune 500 to the Fortune 500,000. That creates immediate customer value and opens the door to additional offerings on the ServiceNow AI Platform over time. ServiceNow's partner ecosystem will support adoption across both existing and new customer bases.

Availability:

During controlled availability, anyone interested in Flow can sign up at letsflow.ai for updates and early access to a free trial. Customers in North America get priority access in the initial weeks, with general availability expected for North America and EMEA in Q4 2026. Flow will also be available to existing ServiceNow customers on any ServiceNow pricing plan that includes AI capabilities.

About ServiceNow

ServiceNow (NYSE: NOW) is the Super Intelligence Control Tower for business reinvention. The ServiceNow platform integrates with any model, any cloud and any data source to orchestrate, govern, and secure work across the agentic enterprise. ServiceNow gives customers the enterprise context and control to build and scale confidently. With more than 100 billion workflows running on the platform each year, ServiceNow helps organizations turn fragmented operations into coordinated, autonomous work for IT, CRM, Security, employee experience and more. Learn how ServiceNow puts AI to work for people at www.servicenow.com.

Forward-Looking Statements

This press release contains “forward-looking statements” about the expectations, beliefs, plans, and intentions relating to Flow by ServiceNow. Such statements include statements regarding future product capabilities and offerings and expected benefits to ServiceNow. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, ServiceNow’s results could differ materially from the results expressed or implied by the forward-looking statements made. ServiceNow undertakes no obligation, and does not intend, to update the forward-looking statements. Factors that may cause actual results to differ materially from those in any forward-looking statements include: (i) delays and unexpected difficulties and expenses in executing the product capabilities and offerings, (ii) changes in the regulatory landscape related to AI and (iii) uncertainty as to whether sales will justify the investments in the product capabilities and offerings. Further information on factors that could affect ServiceNow’s financial and other results is included in the filings ServiceNow makes with the Securities and Exchange Commission from time to time.

© 2026 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries. Other company names, product names, and logos may be trademarks of the respective companies with which they are associated.

Key Takeaways ServiceNow's CRM ACV reached about $2B as net new ACV growth accelerated year over year and sequentially.NOW's Level 1 ITSM AI specialists resolve about 80-85% of service requests without human interaction.ServiceNow AI ACV topped $1B as deals with five or more AI products grew 5.5 times. ServiceNow (NOW - Free Report) is expanding its addressable market by helping enterprises replace fragmented legacy systems and point solutions with its unified Artificial Intelligence (AI) platform. The platform connects AI, data and workflows across technology, customer relationship management (CRM - Free Report) , core business and creator functions, while integrating with existing systems and cloud environments. This strategy is strengthening NOW’s position against Microsoft (MSFT - Free Report) and Salesforce (CRM - Free Report) across enterprise workflows, CRM, information technology (IT) service management and AI automation.

Legacy replacement is gaining traction, particularly in CRM. In the second quarter of 2026, NOW’s CRM business reached roughly $2 billion in annual contract value (ACV), while CRM net new ACV growth accelerated both year over year and sequentially. Sales CRM average deal size doubled year over year and ServiceNow expects to process more than 2 billion service CRM cases this year. Partners are increasingly positioning NOW as an operational CRM platform, increasing competition with Salesforce.

Recent wins highlight the opportunity. In the second quarter of 2026, a partner completed a full front-office replacement of a major CRM deployment in two months. A North American automotive marketplace selected ServiceNow after outgrowing its legacy CPQ provider, while a financial institution replaced legacy point solutions by consolidating loan-origination workflows on NOW’s platform. ServiceNow is targeting the broader “Fortune 500,000” with AI-native offerings designed to displace legacy products.

AI automation strengthens NOW’s challenge to Microsoft and Salesforce. ServiceNow’s Level 1 ITSM AI specialists can resolve roughly 80-85% of service requests without human interaction, while some requests that previously took two days can be completed in about 20 minutes. The strategy is supporting customer expansion and revenues. NOW ended the second quarter of 2026 with 658 customers generating more than $5 million in ACV. ServiceNow AI ACV surpassed $1 billion, while deals involving five or more AI products grew 5.5 times year over year. In the second quarter of 2026, subscription revenues increased 24.5% to $3.88 billion, while total revenues rose 24% to $3.99 billion.

NOW Faces Tough CompetitionMicrosoft is challenging NOW through Microsoft 365, Dynamics 365, Foundry and Agent 365. In the fourth quarter of fiscal 2026, Microsoft’s enterprise AI momentum strengthened. Microsoft Foundry reached 100,000 customers, with revenues more than doubling year over year, while Agent 365 registered nearly 40 million agents across tens of thousands of companies within two months. Nearly 90% of Fortune 500 companies were grounding agents using Foundry, Fabric and Work IQ. Dynamics 365 exposed more than 650,000 Model Context Protocol actions across key functions, while customer-service usage-based consumption increased fourfold sequentially. Hundreds of enterprises purchased millions of seats of the E7 suite, combining Copilot, E5, Entra and Agent 365.

Salesforce presents more direct pressure on ServiceNow. In the second quarter of fiscal 2027, Salesforce’s Agentforce IT Service had already surpassed 450 customers, including conversions from ServiceNow. Agentforce annual recurring revenues reached $1.5 billion, while the number of accounts with agents in production increased 70% sequentially. Agentforce usage continued to expand, with customers generating 3.2 billion Agentic Work Units in the quarter, up 97% sequentially. Salesforce is extending Agentforce beyond CRM into IT services, back-office operations and supply-chain workflows, increasing its overlap with ServiceNow’s expansion across enterprise workflows and automation.

NOW’s Share Price Performance, Valuation & EstimatesShares of ServiceNow have declined 8.1% year to date against the broader Zacks Computer and Technology sector’s 23.4% growth.

NOW’s Stock Price Performance
Image Source: Zacks Investment Research

NOW stock is trading at a premium, with a forward 12-month price-to-earnings ratio of 29.75 compared with the broader sector’s 21.45. ServiceNow has a Value Score of D.

NOW’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for NOW’s earnings is currently pegged at $1.03 per share, unchanged over the past 30 days, suggesting 7.29% year-over-year growth.

ServiceNow currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ServiceNow, Inc. (NYSE:NOW – Get Free Report)’s share price dropped 2.4% during trading on Friday . The company traded as low as $135.07 and last traded at $135.2060. Approximately 18,811,563 shares were traded during trading, a decline of 17% from the average session volume of 22,796,012 shares. The stock had previously closed at $138.47.

Analysts Set New Price Targets A number of brokerages have recently issued reports on NOW. Guggenheim raised ServiceNow from a “neutral” rating to a “buy” rating and set a $125.00 price target on the stock in a research note on Wednesday, July 1st. Morgan Stanley set a $180.00 price objective on ServiceNow in a report on Tuesday, July 21st. Robert W. Baird upped their target price on shares of ServiceNow from $118.00 to $125.00 and gave the stock an “outperform” rating in a report on Thursday, July 23rd. BTIG Research increased their target price on shares of ServiceNow from $150.00 to $170.00 and gave the company a “buy” rating in a research report on Tuesday, September 8th. Finally, UBS Group set a $248.00 price target on shares of ServiceNow in a research report on Thursday, July 23rd. One analyst has rated the stock with a Strong Buy rating, thirty-six have assigned a Buy rating, three have given a Hold rating and two have assigned a Sell rating to the company. According to data from MarketBeat, the stock currently has an average rating of “Moderate Buy” and an average target price of $145.71.

Get Our Latest Stock Report on NOW

ServiceNow Stock Performance The firm has a fifty day moving average price of $123.37 and a 200 day moving average price of $110.13. The company has a current ratio of 0.70, a quick ratio of 0.70 and a debt-to-equity ratio of 0.43. The firm has a market cap of $139.80 billion, a PE ratio of 84.50, a price-to-earnings-growth ratio of 2.49 and a beta of 0.97. ServiceNow (NYSE:NOW – Get Free Report) last released its quarterly earnings data on Wednesday, July 22nd. The information technology services provider reported $0.90 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.86 by $0.04. ServiceNow had a net margin of 11.34% and a return on equity of 16.45%. The firm had revenue of $3.99 billion during the quarter, compared to analysts’ expectations of $3.93 billion. During the same period last year, the business earned $0.81 earnings per share. ServiceNow’s revenue was up 24.0% compared to the same quarter last year. As a group, equities research analysts expect that ServiceNow, Inc. will post 2.22 earnings per share for the current fiscal year.

Insider Activity In other news, Director Paul Chamberlain sold 2,700 shares of the firm’s stock in a transaction that occurred on Thursday, August 27th. The shares were sold at an average price of $135.50, for a total transaction of $365,850.00. Following the completion of the sale, the director owned 43,990 shares in the company, valued at $5,960,645. This trade represents a 5.78% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. Also, insider Paul Fipps sold 2,034 shares of ServiceNow stock in a transaction that occurred on Monday, August 31st. The shares were sold at an average price of $147.87, for a total transaction of $300,767.58. Following the sale, the insider directly owned 18,305 shares in the company, valued at approximately $2,706,760.35. The trade was a 10.00% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold a total of 14,081 shares of company stock valued at $1,937,904 in the last 90 days. Company insiders own 0.34% of the company’s stock.

Hedge Funds Weigh In On ServiceNow Hedge funds have recently modified their holdings of the business. BlackRock Inc. acquired a new stake in shares of ServiceNow during the second quarter valued at about $9,536,615,000. State Street Corp boosted its position in shares of ServiceNow by 406.6% during the 4th quarter. State Street Corp now owns 47,896,597 shares of the information technology services provider’s stock worth $7,337,280,000 after purchasing an additional 38,441,898 shares during the period. Geode Capital Management LLC boosted its position in shares of ServiceNow by 404.8% during the 4th quarter. Geode Capital Management LLC now owns 23,512,428 shares of the information technology services provider’s stock worth $3,591,425,000 after purchasing an additional 18,854,775 shares during the period. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC increased its holdings in ServiceNow by 16.6% in the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 16,638,071 shares of the information technology services provider’s stock valued at $1,651,828,000 after purchasing an additional 2,362,606 shares during the last quarter. Finally, Norges Bank acquired a new stake in ServiceNow in the 4th quarter valued at approximately $2,020,992,000. 87.18% of the stock is currently owned by hedge funds and other institutional investors.

ServiceNow Company Profile (Get Free Report)

ServiceNow, Inc is a cloud-based enterprise software company that provides digital workflow and automation solutions. Its Now Platform enables organizations to manage and connect business processes across information technology, customer service, human resources, finance, legal operations and other departments.

The company’s products and services include IT service management, IT operations management, customer service management, human resources service delivery, security operations, risk and compliance management, strategic portfolio management and application development tools.

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ServiceNow and Palantir both posted jaw-dropping AI numbers in Q2, but their business models represent radically different bets on how enterprise AI actually wins. One valuation makes the choice obvious.

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ServiceNow (NYSE: NOW | NOW Price Prediction) and Palantir (NASDAQ: PLTR) both delivered Q2 FY26 results that reframed the enterprise AI debate.

ServiceNow crossed $1B in AI ACV while pushing governance as the control layer for agents. Palantir posted 92.8% revenue growth on surging sovereign AI demand. Two very different bets on the same wave.

Governed Agents Lift One. Sovereign AI Rockets the Other. ServiceNow reported revenue of $3.99B, up 24% year over year, with subscription revenue of $3.877B and 123 deals over $1M in net new ACV, up 40%. Customers with agentic AI in production climbed 9x over nine months.

CEO Bill McDermott framed the platform bluntly: “We’re in the control business, one platform, one system of action, any cloud, any agent, any workflow, any model, governed, secured, and accountable.” AI Control Tower already has 500 plus customers live within six months of launch.

Palantir went hyperbolic. U.S. commercial revenue exploded 149% year over year to $764M, and the Rule of 40 score hit 155. Adjusted free cash flow reached $1.22 billion at a 63% margin.

CEO Alex Karp told investors “Our customers are making the decision to go deep with us with greater urgency and conviction than I’ve ever seen before.” Net dollar retention jumped to 157%. Extraordinary numbers, and they explain the stock.

Workflow Consolidator vs. Sovereign AI Factory Lens ServiceNow Palantir Core Bet Governance layer across every model and agent Sovereign AIP with customer-owned weights Revenue Growth 24.0% YoY 92.8% YoY Forward P/E 26 74 Price/Sales 9.3 65 Key Vulnerability Gross margin pressure from hyperscaler AI usage Valuation, SBC of $265M ServiceNow monetizes context. Its 98% renewal rate and the fact that 18 of the top 20 deals included eight or more products tell you customers keep consolidating spend.

Palantir monetizes intensity. Forward-deployed engineers plant AIP inside operations and the account expands violently, evidenced by 220 deals worth $1M or more. Karp’s pitch: “Only Palantir has FDEs. Everyone else has sparkling sales engineers.”

Watching the Federal Timing and the Valuation Reset Two catalysts matter. For ServiceNow, I want proof that Q3 subscription growth of roughly 20.5% holds after federal on-premise revenue got pulled forward from Q3 to Q2. GAAP subscription gross margin already slipped to 73.5% from 80%, and Otto plus Moveworks integration needs to justify that.

For Palantir, the question is whether commercial can keep compounding at Karp’s stated goal of growth equal or above U.S. commercial for the next 18 months. Any deceleration meets a stock priced at 65 times sales.

Why I Lean ServiceNow at This Price I own neither today, but on relative valuation grounds, ServiceNow screens more attractively. The math is uncomfortable for Palantir. Growing 92.8% is spectacular, yet paying 74 times forward earnings and 65 times sales demands that growth stay near triple digits for years.

ServiceNow at 26 times forward earnings, a $4.2B buyback remaining, and a 29.38% one-year drawdown gives me a margin of safety well above Palantir’s.

For hypergrowth-oriented profiles with tolerance for volatility, Palantir represents the purer AI exposure. On a risk-adjusted, valuation-aware basis, the governance layer at a more modest multiple screens as the more defensible AI story right now.

Contact [email protected] for any questions or corrections.

Key Takeaways ServiceNow's Aramco pact expands AI workflow opportunities across more than 50 countries.NOW's AI ACV topped $1 billion in Q2 2026, with net new AI ACV up over 40% sequentially.ServiceNow faces growing AI workflow competition from Salesforce and Microsoft. ServiceNow (NOW - Free Report) announced yesterday that it signed a collaboration agreement with Aramco Digital to advance artificial intelligence (AI)-powered enterprise transformation across the broader Aramco ecosystem. Aramco Digital plans to use the ServiceNow AI Platform to standardize and govern digital workflows across its affiliates, subsidiaries and joint ventures spanning more than 50 countries. The collaboration broadens NOW’s opportunity across AI automation, customer experience, shared services and enterprise resource planning (ERP) modernization. It could also strengthen ServiceNow’s competitive position against Salesforce (CRM - Free Report) and Microsoft (MSFT - Free Report) as enterprises increasingly seek unified platforms for AI governance, workflow automation and business transformation.

The collaboration should deepen ServiceNow’s presence across a large and complex enterprise environment. The ServiceNow AI Platform integrates data, AI, workflows and security across Technology, Core Business, CRM and Industry, and Creator workflows. Its single data fabric and integrated data layer are designed to connect fragmented systems and streamline processes across departments. Wider adoption across the Aramco ecosystem could therefore create opportunities for ServiceNow to attach additional AI, workflow, data, security and automation products as deployments expand across business functions.

ServiceNow’s open architecture could further strengthen its prospects within Aramco’s diverse technology landscape. AI Control Tower is designed to discover, govern and manage AI agents and systems across heterogeneous environments instead of limiting governance to ServiceNow technologies. The company has introduced Action Fabric, which enables NOW and third-party AI systems to securely execute actions through ServiceNow workflows. Context Engine and Autonomous Data Analytics provide governed enterprise information that autonomous agents can use to make decisions and complete tasks. These capabilities could position NOW as a common orchestration layer across Aramco’s multiple applications, AI models and business systems.

The agreement complements ServiceNow’s accelerating AI adoption. ServiceNow AI annual contract value (ACV) crossed $1 billion in the second quarter of 2026, while net new AI ACV increased more than 40% sequentially. Deals containing five or more ServiceNow AI products grew 5.5 times year over year and the number of customers with Agentic AI in production increased ninefold over nine months. Subscription revenues rose 24.5% year over year to $3.88 billion, while current Remaining Performance Obligations (cRPO) and Remaining Performance Obligations (RPO) reached $13.2 billion and $29 billion, respectively. Successful expansion within Aramco could support cross-selling and longer-term subscription commitments.

NOW Faces Tough CompetitionSalesforce is pushing aggressively into areas traditionally associated with ServiceNow. Agentforce annual recurring revenues (ARR) reached $1.5 billion in the second quarter of fiscal 2027, while accounts with agents in production increased 70% sequentially. Notably, Agentforce IT Service already has more than 450 customers, including conversions from ServiceNow. CRM is expanding into back-office and supply-chain automation through Agentforce Ops. Its broader platform architecture combines AI, data, integration and business applications across sales, service, marketing, analytics, supply chain and IT service workflows, giving Salesforce a platform that increasingly overlaps with NOW’s enterprise workflow ambitions.

Microsoft poses a significant challenge through its extensive enterprise AI ecosystem. Agent 365 has nearly 40 million agents registered across tens of thousands of companies, while Microsoft 365 Copilot has more than 30 million paid seats. Dynamics 365 exposes more than 650,000 model context protocol (MCP) actions across sales, finance, supply chain, HR and customer service, enabling agents to operate using existing business data, permissions, security controls and audit trails.

NOW’s Share Price Performance, Valuation & EstimatesShares of ServiceNow have declined 6.7% year to date against the broader Zacks Computer and Technology sector’s 16.8% growth.

NOW’s Stock Price Performance
Image Source: Zacks Investment Research

NOW stock is trading at a premium, with a forward 12-month price-to-earnings ratio of 30.55 compared with the broader sector’s 20.65. ServiceNow has a Value Score of D.

NOW’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for NOW’s earnings is currently pegged at $1.03 per share, unchanged over the past 30 days, suggesting 7.29% year-over-year growth.

ServiceNow stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ServiceNow just posted a 10% single-day surge on blockbuster AI numbers, but the stock still sits roughly 22% below last year's peak with its analyst target nearly in reach. Whether that combination signals a rare re-entry window or a value…

At $138.43, ServiceNow (NYSE:NOW | NOW Price Prediction) screens as attractive on fundamentals, though the setup favors incremental accumulation over chasing. The stock just jumped 10.04% in a single session and 25.14% over the past month, forcing investors to decide whether the rebound signals a re-rating or a bounce inside a broken chart.

ServiceNow sells the digital workflow platform that enterprises use for IT service management, employee services, customer workflows, and security and AI governance. Its Xanadu and AI Pro platform tier has crossed $1 billion in annual contract value, and management positions the company as the orchestration layer for agentic AI rather than a seat-based application vendor. After a brutal drawdown from last September’s highs, the recovery to $138.43 now sits just above the $142.23 analyst target.

Why the AI Control Tower Story Justifies Paying Up Q2 delivered revenue of $3.987 billion, up 24.01% year over year, with subscription revenue growing 24.5% and a 98% renewal rate. ServiceNow AI ACV crossed $1 billion, agentic deployments increased ninefold in nine months, and deals including five or more AI products grew 5.5x year over year.

Management raised full-year subscription revenue guidance to $15.76 to $15.78 billion and reiterated a 35% free cash flow margin. CEO Bill McDermott called Q2 “exceptional” and said the company is “operating to the Rule of 56, well on our way to the Rule of 60.” With forward earnings around 31x, buyers get 20%+ growth at a multiple well below prior peaks.

Why the Bear Case Still Deserves Airtime The rally has not repaired the damage. Shares remain down 22.05% over the past year and 9.64% year to date. GAAP profitability weakened, with operating income falling 54.75% year over year and net income declining 22.6% as amortization from Moveworks, Veza, and Armis hit the P&L.

Q2 also benefited from U.S. Federal on-premise revenue pulled forward from Q3, and Q3 cRPO faces a $35 million FX headwind. At 79x trailing earnings and 9x sales, any deceleration or hyperscaler-driven gross margin slippage could quickly compress the multiple.

Why Patience Has a Real Cost Here The waiting case rests on two facts. Shares trade near the analyst target, and the 50-day moving average of $110.35 sits well below the current price, meaning technicals are extended. A pullback toward the 200-day of $119.58 would offer a better entry.

Yet 500-plus customers went live on AI Control Tower within six months of launch, and 50% of net new business is non-seat-based. Waiting for a cleaner setup risks missing the re-rating McDermott openly forecasts.

Data Behind the Verdict Shares currently trade at $138.43 against a consensus target of $142.23, implying roughly 3% near-term upside. Of 49 analysts, 10 rate the stock Strong Buy, 34 Buy, 3 Hold, 1 Sell, and 1 Strong Sell. NOW is down 9.64% year to date while the S&P 500 has advanced roughly 9% over the same stretch, leaving a wide relative-performance gap that bulls expect to close.

Incremental Accumulation Framework At $138.43, ServiceNow screens attractively on fundamentals. The AI monetization flywheel is measurable: $1 billion in AI ACV, ProPlus pricing uplifts above 30%, and a $29 billion RPO backlog imply subscription growth stays above 20% through 2027. The path to appreciation runs through Q3 earnings, where a clean beat could push shares back toward the $177 level from a year ago.

The thesis breaks if net new ACV growth decelerates below 20%, if GAAP margin damage from acquisitions persists into 2027, or if enterprise AI budgets consolidate around hyperscalers rather than orchestration layers. Investors weighing entries may prefer scaling in over several tranches rather than committing at a 10% single-day gap.

ServiceNow is one of the cleanest high-growth software balance sheets in the market, and the current price pays for growth without being overpriced.

Contact [email protected] for any questions or corrections.

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ServiceNow (NOW)

Buy NOW. Fundamentals are re-accelerating (Q2 revenue +24%, RPO +21%, AI contract value >$1B, renewal rate up to 98%). The stock is also setting up a technical breakout: it’s pressing the $138.4 resistance and a golden cross is near, with RSI/MACD rising. Upside path: clear $150, then toward the ~$210 prior high.

Key Risk: AI-driven demand disappoints—renewals or RPO growth rolls over, proving AI isn’t improving retention or deal flow.

ServiceNow AI ecosystem (Armis)

Buy NOW and add exposure via Armis-related upside by buying NOW rather than standalone risk: Armis is already contributing to growth, and the thesis is that AI + security/ops automation expands budgets. If NOW’s AI platform keeps winning renewals, Armis-driven revenue mix should keep compounding, supporting multiple expansion as the market re-rates NOW from “AI threat” to “AI beneficiary.”

Key Risk: Armis integration stalls—growth contribution fades and investors conclude acquisitions aren’t translating into durable AI-led expansion.

ServiceNow stock has remained in a strong bull run this month, moving to its highest level since January this year. NOW has soared to $138, up by 70% from its lowest level this year. This rally may continue as demand for its services continues and as a golden cross pattern nears.

NOW stock has slumped in the past few months, moving from a high of $240 in January last year to a low of $81.23. This sell-off happened as more companies embraced AI tools like Claude’s Cowork and ChatGPT’s projects.

The view among investors is that some of these tools would help companies automate some of the tasks that they use ServiceNow for. At the same time, investors pointed to its large acquisitions, including Armis and Moveworks. 

It bought Armis in a $7.75 billion deal and Moveworks for $2.85 billion. These acquisitions sent a message that the company was focusing on growth through acquisitions.

ServiceNow and its proponents have argued that its business will benefit from the AI boom. AI is helping it reduce costs, and improve its offerings. For example, using ServiceNow’s AI tools, clients can improve the hiring process. Also, its AI tools can help companies in its service desks.

The most recent results showed that ServiceNow’s business was doing well, with its revenue jumped by 24% in the second quarter to $3.9 billion, with Armis contributing to this growth. Its remaining performance obligations (RPO) rose by 21% to $13.2 billion. 

Most importantly, its recently-launched ServiceNow AI crossed $1 billion in annual contract value, while its contract renewal rate rose to 98% from Q1’s 97%. This means that its business is not losing customers during the AI boom.

The revenue growth is expected to continue growing in the coming months. For example, analysts predict that its third-quarter revenue rose by 20% to $4.1 billion. Its earnings-per-share is expected to move from 0.96 to $1.03. The annual revenue is expected to jump from $13 billion last year to $16.2 billion, with Armis and Moveworks contributing to the growth.

ServiceNow stock has continued rising because of the recent earnings by other software companies that have demonstrated that there is demand for their services. This includes companies like Figma, Workday, and Salesforce.

ServiceNow stock chart | Source: TradingView

The daily chart shows that the ServiceNow stock has rebounded in the past few months, moving from a low of $81.2 in April to the current $138.4. It is attempting to move above the crucial resistance at $138.4, its highest level on June 1 this year. 

The stock is about to form a golden cross pattern that forms when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. The spread between these two averages has continued narrowing in the past few days. 

The Relative Strength Index (RSI) and the MACD indicators have continued rising. As such, there is a possibility that the stock will continue rising, potentially to the next key resistance level of $150. A move above that level may push it to the July 2025 high of $210.

Salesforce (NYSE:CRM | CRM Price Prediction) and ServiceNow (NYSE:NOW) both reported into a market rotating capital out of AI hardware and into the application layer. Salesforce leaned on Agentforce and a $25 billion accelerated buyback. ServiceNow leaned on a $1 billion AI ACV milestone and a security-heavy acquisition spree. Same theme, very different playbooks.

Agentforce Prints Cash. ServiceNow AI Prints Deals. Salesforce delivered $11.13 billion in revenue, up 13%, with non-GAAP operating margin of 34.8% and operating cash flow of $6.7 billion. Agentforce plus Data 360 sit at $3.4 billion in AI and data ARR, and Marc Benioff called Agentic AI “the biggest growth opportunity for our customers, for us at Salesforce.” Marketing and Tableau softness is real, though, and worth watching.

ServiceNow grew faster: subscription revenue of $3.877 billion, up 24.5%, with 123 net-new-ACV deals over $1 million and agentic deployments up 9x in nine months. The tradeoff shows up in GAAP: operating income fell 54.75% as Moveworks, Veza, and Armis amortization landed.

Business Driver Salesforce ServiceNow Top-line growth 13% YoY 24% YoY Flagship AI franchise Agentforce ARR >$1B ServiceNow AI ACV >$1B Capital priority $25B ASR Armis, Veza, Moveworks M&A Platform Consolidator Vs. AI Control Tower Benioff wants Salesforce to be the agentic CRM of record, and Headless 360 exposes every workflow as an API, MCP, or CLI command. Bill McDermott is building something adjacent: “We are in the control business, one platform, one system of action, any cloud, any agent, any workflow, any model, governed, secured, and accountable.” Over 500 customers are live on AI Control Tower already.

The competitive jabs land in both directions. Salesforce noted McAfee replacing ServiceNow with Agentforce IT Service. ServiceNow claims $2 billion in CRM ACV and Sales CRM deal sizes doubling. Valuation reflects the split: CRM trades at a trailing P/E of 23x, while NOW sits at 75x.

What Actually Decides the Next Four Quarters I want to see whether Salesforce can convert Agentforce production customers, up 50% during the quarter, into consumption revenue that offsets Marketing and Tableau drag. For ServiceNow, the tell is whether AI Control Tower and the Armis-anchored security stack can absorb a 6.5-point drop in GAAP subscription gross margin without spooking the buy side. Both stocks have been punished: CRM is down 22.05% YTD, NOW is down 15.30%.

Where the Setup Favors Salesforce in This Rotation If you believe agentic AI capital is quietly leaving hardware and searching for durable software cash flows, the setup favors CRM here. A 14x forward multiple, $6.7 billion in operating cash flow, and the largest buyback in the company’s history provide more margin for error than the 75x multiple allows. If you prefer the higher-growth, higher-variance path, ServiceNow’s $29 billion RPO and control-tower positioning are compelling. The Armis integration drag is worth monitoring before the multiple resets.

Contact [email protected] for any questions or corrections.

Bank of America is growing more bullish on a group of software companies that it believes are well positioned to benefit from artificial intelligence, helping fuel a broader rally in the sector on Wednesday.

The bank raised its price targets for ServiceNow, Figma, Workday, Adobe and Snowflake, arguing that these companies have shown strong potential to monetize AI.

ServiceNow closed 6.5% higher on Wednesday.

The move reflects a growing shift in investor sentiment toward traditional software companies, which have spent much of the year under pressure from concerns that AI could disrupt their business models and make some software products redundant.

Instead, investors are increasingly betting that companies with deep customer relationships, proprietary data and established enterprise workflows could use AI to expand their products and generate new revenue.

That view helped lift Figma, Workday and Adobe by between 3% and 4% on Wednesday, while the iShares Expanded Tech-Software Sector ETF gained 1%.

Bank of America analyst Tal Liani raised his price target for ServiceNow to $150 from $130 while reiterating a Buy rating.

Liani said ServiceNow is well positioned to benefit from the development of agentic AI, in part because the company has access to historical data and context surrounding how its customers operate their businesses.

ServiceNow's platform helps companies manage workflows ranging from employee onboarding and human resources to other internal business processes.

That gives the company insight into the way organizations perform tasks and make decisions.

Liani believes that knowledge could give ServiceNow an advantage as businesses deploy AI agents capable of performing increasingly complex tasks.

He also pointed to the company's second-quarter performance, noting that ServiceNow exceeded Wall Street expectations for current remaining performance obligations and subscription revenue growth.

Bank of America also raised its targets for several other software companies, including Figma, Workday, Adobe and Snowflake, although Liani said he remains selective about the sector.

Figma was raised to $33 from $30, Workday to $205 from $140, Adobe to $220 from $190, Amplitude from $12 to $14, Snowflake from $330 to $395, among others.

Another factor supporting software stocks is a growing sense that the threat from AI may not be as immediate as investors had feared.

Raymond James analyst Adam Tindle told MarketWatch that recent data points from AI companies such as OpenAI have been "mixed", potentially reducing the pressure on traditional software providers.

The Wall Street Journal reported on Tuesday that OpenAI's revenue rose to $6.7 billion in the three months ended in June, up 18% from the first quarter, while its operating loss widened to $12.3 billion from $9.3 billion.

The figures reportedly disappointed some investors. CNBC also reported on Wednesday that OpenAI CFO Sarah Friar told employees during an all-hands meeting that the company's revenue run rate was up 35% quarter to date.

OpenAI declined to comment.

Tindle said the developments could reduce the "existential perceived threat" that AI could eliminate software-as-a-service businesses such as ServiceNow.

The broader change in sentiment may be more important than any single company's share-price move, Benchmark analyst Yi Fu Lee told MarketWatch.

"What is changing now is that the market is beginning to see improving conviction in the underlying fundamentals and the growing realization that software is becoming a beneficiary of enterprise-AI deployment rather than a victim of AI disruption," he said.

Lee named ServiceNow as his top large-cap software pick, arguing that investors are increasingly rewarding companies with evidence of AI adoption, customer spending and monetization.

"What feels different today is that investors are rewarding companies that are showing tangible evidence of AI adoption, customer spending and monetization."

Cybersecurity is also becoming an increasingly important part of ServiceNow's investment story.

Lee highlighted the company's cybersecurity strategy under Yevgeny Dibrov, who leads its security efforts.

ServiceNow's security and risk business crossed $1 billion in annual contract value last year, providing another potential source of growth as companies seek to manage the security risks created by expanding AI adoption.

Software-as-a-Service (SaaS) stocks plummeted last year as investors got nervous about their obsolescence in the age of artificial intelligence (AI). However, the fears have not been justified, at least until now, and the stocks may have been oversold.

Many SaaS companies have been thriving as they incorporate AI into their operations, offering even greater value to their clients. Palantir Technologies, Shopify, and ServiceNow (NOW +0.08%), for example, all reported outstanding results for their most recent quarters; Palantir Technologies' revenue increased 93% year over year, Shopify's were up 34%, and ServiceNow's rose 24%.

Not every fantastic company makes a fantastic investment, though. Palantir and Shopify are capitalizing on their growth opportunities, but their stocks have a premium price tag. That makes them more susceptible to dropping on bad news, and that's happened. Their stocks are down this year, even though they're back on the rise, and so is ServiceNow's. However, ServiceNow looks like a bargain, while Palantir and Shopify are still quite expensive, which is why ServiceNow is the best deal of the bunch today. Let's take a closer look.

PLTR PE Ratio (Forward 1y) data by YCharts

Workflow automation in the AI era ServiceNow provides workflow automation services to more than 8,800 enterprise clients, and its platform unifies all of the user's services, including legacy operations and AI agents, into one connected interface. It was one of the companies hit hardest by the SaaS plunge, but it already had an AI deployment model in the works as soon as AI came onto the scene, and it's taking the bull by the horns and demonstrating its value by integrating AI throughout its operations. "The path to value isn't just making AI. It's deploying AI securely across the enterprise," said CEO Bill McDermott on the second-quarter earnings call. That's what ServiceNow does.

Image source: Getty Images.

McDermott also noted that while the market is enthusiastic about the nuts and bolts of AI, or the infrastructure hardware products that are driving market gains, data company IDC says that spending on AI software is going to grow 53% this year, which is 17% higher than expected spend on AI hardware. And while investors debate the benefits of one chip stock over another, ServiceNow provides stability.

"Whichever chip wins, whichever lab wins, whichever price per token regime prevails, the enterprise needs one governed layer of record ... and ServiceNow offers needed certainty in an uncertain stack," McDermott said.

Steady growth and bigger contracts Revenue increased 24% year over year in the 2026 second quarter, driven by a 24.5% increase in subscription revenue, the kind that makes it a SaaS company. However, ServiceNow works through multiyear contracts, locking in long-term recurring revenue streams. Remaining performance obligations (RPO) increased 21% over last year, implying steady revenue for the coming years. It signed 123 transactions worth at least $1 million in net new annual contract value (ACV), nearly 40% more than last year, and it ended the quarter with 658 customers with at least $5 million in ACV, a 23% increase over last year.

In the second quarter, the company deepened some of its collaborations with top AI companies, including Nvidia, which uses its platform for agentic AI governance, and Amazon, which offers its platform to Amazon Web Services (AWS) cloud clients as a unified architecture.

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ServiceNow is also on an acquisition binge, beefing up its platform to handle greater workloads and security threats. It bought cybersecurity company Armis last December for $7.8 billion, and it also acquired identity security company Veza.

A profit powerhouse As a service-based stock, ServiceNow is highly profitable with strong margins. Operating margin was 29.5% in the second quarter, and free-cash-flow margin was 16%. Management is guiding for a 31.5% operating margin and 35% free-cash-flow margin for the full year. The company has generated $4.7 billion in free cash flow over the trailing 12 months, a number that continues to increase. With AI in the picture, margins could continue to expand, and management expects margins to improve as its recent acquisitions offer a new level of scale.

If ServiceNow continues to grow at similar rates and generate high profits and free cash flow, the stock will eventually catch up, which is why it looks priced to buy right now.

Software stocks are staging a comeback in the second half of the year, according to Jefferies analysts, who pointed to strong results from ServiceNow Inc (NYSE:NOW, XETRA:4S0), SAP, Roper Technologies, Atlassian (NASDAQ:TEAM) and Cloudflare as evidence the sector is shaking off fears of AI-driven disruption.

Solid earnings beats, healthy margins and early signs of AI monetization through consumption growth and product up-tiering are easing investor concerns about software companies' long-term value, the analysts said.

Since an April 10 low, the iShares Expanded Tech-Software ETF has outperformed the VanEck Semiconductor ETF by four percentage points.

Jefferies analysts said the rally is highly selective. Atlassian (NASDAQ:TEAM) shares have surged more than 160% since the April low, while HubSpot has gained less than 10% over the same period. Demand continues to outpace supply, with power, labor and permitting now the primary bottlenecks rather than chip availability. National data center vacancy sits below 1.4%, and under 1% in Northern Virginia, with the buildout expected to run more than three years, the analysts said, adding they see no sign of a bubble forming.

Transformers and gas turbines now carry lead times of four to five years, with suppliers largely sold out through 2030 and 2031, the expert said, while utilities increasingly require data center operators to bring their own power. Skilled labor is also thinning and project cancellations are rising, adding further strain to permitting timelines.

The analysts said elevated capital expenditure across Microsoft, Amazon, Google and Meta should persist as a result.

Jefferies analysts also addressed recent leadership changes at Google parent Alphabet Inc (NASDAQ:GOOG), after Jeff Dean said on August 5 he would leave the company alongside several senior researchers to launch an AI startup called Discovery Loop. Demis Hassabis moved from his role as CEO of DeepMind to Chief Scientist at Google, with Koray Kavukcuoglu taking over leadership of DeepMind.

The analysts said the changes do not alter Google's AI trajectory, arguing the company's competitive advantage rests on its data assets, vertically integrated AI platform and global distribution rather than any individual researcher. Jefferies said its thesis remains that AI represents an infrastructure and monetization race, and that Google's scale, accelerating Gemini adoption, Cloud profitability and continued AI investment position it to remain a long-term winner.

Software stocks have taken a beating this year over fears of competition from artificial intelligence (AI). Shares of Microsoft (MSFT -0.98%), Salesforce (CRM +0.75%), and ServiceNow (NOW -1.05%) have underperformed the broader market this year, down as much as 29% year to date as of this writing.

But in a CNBC appearance earlier this year, top tech analyst Dan Ives saw the sell-off as the most disconnected from business fundamentals he has seen since the late 1990s. Recent earnings results have supported Ives' bullish view and suggest Wall Street might be wrong to discount these stocks.

Image source: Getty Images.

Strong fundamentals support the bull case Microsoft stock is roughly flat so far this year, underperforming the Nasdaq Composite's 11% return. This is despite the software giant reporting a strong 18% year-over-year increase in revenue last quarter, with surging demand across its Azure enterprise cloud platform and paid Microsoft 365 Copilot seats, which now exceed 30 million.

ServiceNow is another underperformer, down 24%. Yet the workflow automation leaders' subscription revenue continues to grow at high rates, up 23% in constant currency in the second quarter. The company closed 123 deals worth over $1 million, with strong momentum in AI-related contracts.

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Salesforce posted a 14% year-over-year increase in first-quarter revenue -- beating the consensus analyst estimate for the second straight quarter. Current remaining performance obligations reached nearly $34 billion. Like Microsoft and ServiceNow, Salesforce is seeing momentum in AI-related products. It signed a record 98 deals worth over $1 million in new annual contract value.

These results show that customers are turning to software providers they already know and trust to handle AI integration, workflows, and security in their operations. This validates Ives' view that software is the "heart and lungs" of the AI build-out.

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Risks to watch Microsoft, ServiceNow, and Salesforce are providing the data, security, and workflow orchestration that enable AI models to perform productive work.

Still, investors will have to watch for possible headwinds these companies face. For example, Microsoft is investing heavily in AI infrastructure to expand data center capacity that could pressure its near-term earnings. Microsoft spent $41 billion in capital expenditures last quarter alone.

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Moreover, as AI agents become more widely adopted and capable of completing increasingly complex projects, they could reduce the need for companies to purchase additional software licenses (user seats), thereby pressuring software companies' revenue growth.

However, Ives' view that these leaders will be difficult to replace because of their deep integration with enterprise systems is holding up. Analysts are still maintaining their long-term earnings growth estimates for these companies. The recent sell-off in top software stocks looks more like a buying opportunity than a reason to sell.

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Bill McDermott, chief executive of ServiceNow Bloomberg/Getty Images ServiceNow has been cutting several hundred jobs as part of a global restructuring, the latest sign of pressure on the software industry.

A ServiceNow spokesperson said a "low single-digit" percentage of the company's total head count has been affected by the cuts, which have happened over several months this year.

ServiceNow ended 2025 with 29,187 employees, so the cuts likely total several hundred jobs.

CEO Bill McDermott said at the start of this year that ServiceNow would end 2026 with the same head count as it started the year with. He's also been pushing staff to reorganize their workflows to embrace new technology and be an example to ServiceNow customers on how to become more efficient.

ServiceNow has also made some big acquisitions in the past year, such as Armis and Veza, so the company is likely streamlining operations from integrating these new businesses.

One ServiceNow employee told Business Insider on Tuesday the cuts were described internally as a global restructuring and said it had been a "very tough day." This person asked not to be identified discussing sensitive matters.

Investors have hammered some software stocks in the past year on concerns that AI will disrupt the sector by reducing demand and making it easier for companies to develop their own software tools.

ServiceNow, like many enterprise software companies, is investing heavily in AI while reshaping parts of its business.

Last week, ServiceNow reported quarterly results that met or exceeded Wall Street expectations and raised its full-year subscription revenue guidance, even as investors continue to debate how AI will reshape the software industry.

Sign up for BI's Tech Memo newsletter here. Reach out to me via email at [email protected].

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Alistair Barr is the author of Business Insider's Tech Memo newsletter. Sign up here. Before that, he was BI's Global Tech Editor and the Big Tech team leader at Bloomberg, following a reporting career at The Wall Street Journal, USA Today, Reuters, and MarketWatch. Alistair won a Gerald Loeb Award in 2007 for coverage of short selling and was a finalist in 2013 for scoops on the Facebook IPO. More recently, he won a 2024 San Francisco Press Club award for commentary. Got a tip? Reach out using the secure messaging app Signal (+1 415-341-4927) or via email on [email protected] oversees all things Big Tech, along with startups and venture capital. He writes analysis and columns about topics including generative AI, large language models, cloud computing, semiconductors, online search, e-commerce, EVs, robotics, and autonomous vehicles.Popular StoriesArtificial Intelligence:It's getting harder to make big leaps at the frontier of AIOpenAI's AI-adjusted earnings numbers have echoes of Groupon and WeWorkDeath by LLM: Stack Overflow's decline, and its plan to survive, shows the future of free online data in an AI worldCloud computing:Amazon dominated the first cloud era. The AI boom has kicked off Cloud 2.0, and the company doesn't have a head start this time.In cloud, there's AI (which is hot) and everything else (which is not)Chips:Why Intel is still so important: Real countries have fabsApple's made-in-the-USA chips signal a turnaround for the US's big semiconductor betEVs and Tesla:Tesla's AI supercomputer has a Silicon Valley town rushing to meet surging electricity demandTesla's Cybertruck is outselling almost every other EV in the USOnline Search:Google is losing its status as a verbA simple way to fix search: Bright pink ads

Layoffs Artificial Intelligence Employment More Business Enterprise Software Software Tech

ServiceNow (NOW +7.38%) continued to deliver excellent revenue growth when the software-as-a-service (SaaS) company reported its Q2 earnings; however, it once again wasn't enough to lift the beaten-down stock. There has been a narrative that AI will disrupt the software layer, and as a result, SaaS stocks have seemingly been able to do no right. As a result, ServiceNow stock is down 40% on the year.

While its stock has been struggling, ServiceNow has shown no signs of its growth slowing down. The company's platform is the backbone of its customers' entire software stacks, and it's been seeing strong growth with both its AI and cybersecurity offerings.

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Accelerating growth For Q2, ServiceNow's revenue jumped 24% year over year to $3.99 billion, while its adjusted earnings per share (EPS) rose 11% to $0.90. That was above the $0.86 in adjusted EPS and $3.93 billion in revenue that analysts were expecting.

Subscription revenue climbed 25% year over year to $3.88 billion, while professional services revenue rose 9% to $110 million. On a constant currency basis, subscription revenue accelerated from 19% growth in Q1 to that 23% growth.

ServiceNow is seeing strength in several areas. Its AI annual contract value (ACV) surged 40% quarter over quarter to over $1 billion, and it is on track to hit $1.5 trillion by year-end. Meanwhile, it said it already has a $1 billion cybersecurity business and that it's growing faster than any other top company in the space. It added that AI Control Tower, which launched just this spring, is "supercharging" its security and risk business.

The company also highlighted the momentum it was seeing in customer relationship management (CRM). It said this is already a $2 billion ACV business and that growth has been accelerating.

Another closely watched SaaS metric is remaining performance obligations (RPO), which is deferred revenue plus backlog growth, as it can be a future revenue growth indicator. In the quarter, ServiceNow saw its RPO increase by 21% to $29 billion, while current RPO (cRPO) also increased by 21% to $13.2 billion.

Looking ahead, the company projected its Q3 subscription revenue to grow 20.5% to a range of $3.975 billion to $3.98 billion. It anticipates cRPO to increase by 19.5%. For the full year, the company raised its subscription revenue guidance to a range of $15.76 billion and $15.78 billion, representing growth of 22.5%. That was up from prior revenue guidance of $15.735 billion to $15.775 billion, representing growth of 22% to 22.5%.

The company indicated that its guidance is likely conservative and that there could be upside given its strong new net ACV.

Image source: The Motley Fool.

Trading at a forward price-to-sales (P/S) multiple of 5 based on 2027 analyst estimates and a forward P/E of 18, the stock looks undervalued for a company with a highly recurring business model and strong gross margins that is growing its revenue above 20%. However, valuation alone isn't a reason enough to buy the stock.

While it does face the risk of AI disruption, given how embedded its systems are in customers' workflows and data, I think this risk is minimal. I also think most organizations will not want to tie their fortunes to one AI model company, which is a big reason why having a separate software layer is important. Meanwhile, ServiceNow appears to be doing all the right things. It's leaned into both AI and cybersecurity, and it's handling business as usual.

At the same time, its AI Control Tower looks like it has strong potential to be a future growth driver. The rise of AI agents should create a big need for agentic AI orchestration platforms, and its solution looks poised to be a top option. It is designed to oversee every AI agent model running within an organization, while monitoring their performance and making sure they follow governance rules. With its acquisitions of Armis and Veza, it also has strong security protocols in place.

While it likely will require patience, I'd be a buyer of the stock.

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.

Live Coverage Updates appear automatically as they are published.

Live Updates Pinned 1 hour ago

Live

This live blog is being updated by Thomas Richmond, a 24/7 Wall St. contributor. You’ll get expert analysis of ServiceNow’s Q2 earnings.

Simply stay on this page, and new updates will appear below automatically. We expect ServiceNow to release earnings shortly after 4:10 p.m. ET.

19 minutes ago

Live

ServiceNow closed 123 transactions worth more than $1 million in net new annual contract value during Q2, an increase of nearly 40% year over year.

The company finished the quarter with 658 customers generating more than $5 million in ACV, up approximately 23%. Total remaining performance obligations increased 21% to $29.0 billion, supported by longer customer commitments and stronger partner demand.

Current remaining performance obligations reached $13.20 billion, also up 21%, providing substantial visibility into revenue expected over the next 12 months.

The deal data reinforces the idea that large enterprises are consolidating more workflows, security functions, and AI deployments onto ServiceNow’s platform.

20 minutes ago

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ServiceNow’s Q2 subscription revenue reached $3.88 billion, exceeding the high end of its guidance by 150 basis points and rising 24.5% year over year.

However, investors should note that part of the upside came from strong U.S. federal demand accelerating some on-premise subscription revenue from Q3 into Q2. That timing benefit helps explain why management expects Q3 subscription revenue growth to moderate to 20.5%.

Q3 cRPO growth is also expected to slow to 19.5% on a reported basis, or 20% in constant currency, compared with 21% reported growth in Q2.

The quarter was fundamentally strong, but the pull-forward means investors should avoid extrapolating all of the Q2 outperformance into the second half of the year.

24 minutes ago

Live

ServiceNow raised its full-year subscription revenue guidance to between $15.76 and $15.78 billion, representing approximately 22.5% growth.

The previous outlook called for $15.53 billion to $15.57 billion, meaning the midpoint increased by roughly $220 million. Management attributed the raise to stronger-than-expected net new annual contract value.

For Q3, ServiceNow expects subscription revenue of $3.975 billion to $3.980 billion, representing 20.5% reported growth. The company maintained its full-year non-GAAP operating margin target of 31.5% and free cash flow margin target of 35%.

The higher revenue outlook suggests enterprise demand remains durable despite the stock’s steep year-to-date decline.

27 minutes ago

Live

ServiceNow reached a major AI monetization milestone during Q2, with its AI products surpassing $1 billion in annual contract value.

Management said agentic AI deployments increased ninefold over the past nine months, while AI net new ACV growth continued to exceed its expectations. The company’s AI Control Tower is also driving additional demand across its Security and Risk business.

ServiceNow ultimately expects AI products to generate 30% of companywide ACV by 2030. Crossing $1 billion this early provides tangible evidence that its AI strategy is producing commercial results rather than remaining a long-term promise.

51 minutes ago

Live

ServiceNow just reported Q2 earnings, with shares initially up 2% following the report. Here are the key numbers:

Revenue: $3.99 billion vs. $3.93 billion expected EPS: $0.90 vs. $0.86 expected Quick Read:

ServiceNow beat expectations on both the top and bottom lines, with revenue rising 24% year over year and 6% sequentially.

EPS increased 10% year over year despite declining 7% from the previous quarter, while the positive initial reaction suggests the results cleared investors’ lowered expectations.

53 minutes ago

Live

ServiceNow CEO Bill McDermott previously delivered one of the boldest forecasts on Wall Street: “ServiceNow will become a $1 trillion company by 2030.”

With ServiceNow currently valued at just under $100 billion, McDermott is effectively calling for the company’s market value to increase tenfold within four years. He has also put his own money behind the business, purchasing about $3 million of NOW shares at $107 apiece.

Nvidia CEO Jensen Huang has reportedly suggested ServiceNow could eventually grow 100-fold, while President Trump purchased approximately $5 million of the stock.

Amazon, Microsoft, Alphabet, OpenAI, and Anthropic are also expanding their partnerships with the enterprise software leader.

The bull case is that ServiceNow is becoming the essential operating system for AI-powered enterprise workflows. Building a custom alternative through “vibe coding” could reportedly cost 5-10x more than adopting ServiceNow’s platform.

After the stock’s brutal decline, investors now face a remarkable question: Is ServiceNow one of the strongest buying opportunities in the market?

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and ServiceNow didn't make the cut. Grab the names FREE today.

1 hour ago

Live

ServiceNow (NYSE:NOW | NOW Price Prediction) reports Q2 earnings tonight.

The Consensus Bar EPS estimate: $0.40, versus $0.82 in Q2 2025 (pre-split) Subscription revenue guide: $3.650B–$3.655B, +21.5% GAAP cRPO growth guide: 22.5% GAAP Non-GAAP operating margin: 31.5% Price and Positioning NOW last traded at $95.66, off 6.27% intraday, -8.08% on the week, and -37.59% YTD.

The full-chain put/call has slipped to 0.53, and the July 24 expiry shows 27,419 calls versus 19,615 puts, pricing in an outsized move.

What Triggers a Rebound A cRPO print above 23% GAAP, a Now Assist update pacing toward the $1B ACV target, and an FY2026 subscription raise above $15.57B would reset the narrative.

A subscription cut below $15.53B, margin under 31.5%, or vague AI monetization language could extend the stock’s drawdown.

1 hour ago

Live

With shares trading at $95.84, down 6.09% intraday ahead of the 4:10 PM ET Q2 earnings release, here is what to listen for on tonight’s call.

Top 5 Analyst Questions Is Now Assist tracking to the $1B ACV target by 2026? How much cRPO was pulled forward by the July 1 pricing change? Financial exposure from CVE-2026-6875? Armis, Veza, and Moveworks integration timeline? Federal deal slippage quantified? Key Topics Management Must Address Subscription gross margin trajectory after the drop to 82.5% Pace of the $2B accelerated buyback H2 guidance framing Buzzwords to Listen For “AI control tower,” “agentic operating system,” “Rule of 55+,” “platinum standard” Red Flags cRPO growth below 22.5% guidance Operating margin softer than 31.5% Any FY2026 subscription cut below $15.53B Vague AI monetization metrics 1 hour ago

Live

Several wildcards could swing tonight’s reaction for ServiceNow’s (NYSE:NOW) Q2 earnings.

Security Exploit in the Wild A critical sandbox-escape flaw, CVE-2026-6875 with a CVSS score of 9.5, is being actively exploited, and 31% of tested instances exposed data without credentials.

Management commentary on remediation costs is a swing factor.

Pricing Pull-Forward A new pricing model effective July 1, 2026, triggered early renewals, which Jefferies flagged and KeyBanc cited in its Underweight, $85 target.

cRPO strength could potentially be borrowed from the upcoming Q3 quarter.

Mix Shift and M&A Drag Self-hosted-to-hosted conversion carries a ~150bps subscription headwind, while Armis, Veza, and Moveworks integration adds noise.

Options positioning is calm, with a full-chain put/call ratio of 0.54.

1 hour ago

Live

ServiceNow reports Q2 FY2026 earnings at 4:10 PM ET tonight after the closing bell, with shares down 33.38% year to date.

The central question is whether the company’s underlying growth remains strong enough to justify a rebound. Revenue is still growing 22.1%, while Now Assist net new annual contract value more than doubled year over year in Q4, keeping the company’s $1 billion AI target within reach.

Investors will also measure the results against ServiceNow’s FY2026 subscription revenue guidance of $15.53 billion to $15.57 billion. Current remaining performance obligations, or cRPO, will be one of the most important indicators of future demand.

Wall Street remains firmly bullish, with 43 buy ratings, only one sell rating, and an average price target of $141.64. A strong cRPO result could reestablish ServiceNow as a durable software compounder.

ServiceNow (NYSE:NOW) reports Q2 FY2026 earnings results tonight at 4:10 PM ET after today’s close. With shares down 46.84% over the past year and trading at $95.61, this earnings report carries unusual weight for Bill McDermott’s AI narrative.

Momentum Meets a Reset in Sentiment ServiceNow closed out fiscal year 2025 in a big way. Revenue hit $3.568B (+20.66% YoY), subscription revenue reached $3.466B (+21% YoY), and cRPO climbed to $12.85B, up 25%. Free cash flow of $2.0B pushed Q4 FCF margin to 57%.

However, the stock’s performance tells a different story. A 5-for-1 split took effect December 2025, and shares have since compressed, sitting roughly 55% below the 52-week high of $210.20. The stock’s forward P/E of 25 reflects that reset. Reddit’s r/stockmarket flagged the disconnect, noting NOW has been “growing free cash flow per share by over 20% per year for over a decade.”

Consensus Estimates Metric Q2 FY26 Guide YoY FY26 Guide Subscription Revenue N/A (Q1 guide: $3,650M-$3,655M) ~21.5% GAAP $15,530M-$15,570M Non-GAAP Op Margin Q1: 31.5% expanding 32% FCF Margin (FY) – – 36% Growth is expected to hold in the low 20s, but a ~150bps self-hosted-to-hosted mix headwind and ~100bps Moveworks drag weigh on Q1 optics. That means any softening in cRPO could suggest deceleration is coming.

What I’m Watching: AI Monetization, Margins, and M&A Tonight, I’ll be watching how ServiceNow frames Now Assist against the $1B ACV target originally set for 2026. Q4’s 244 transactions above $1M in net new ACV raised the bar, and repeat traction here anchors the agentic AI thesis.

Investors will also focus on subscription gross margin, which slipped to 82.5% in Q4 from 84.5% on AI infrastructure spend. FY26 is guided to 82%, so any further slippage complicates the operating margin path to 32%.

Integration cadence for Moveworks and the pending Armis and Veza acquisitions are also important factors. So does U.S. Federal commentary given upcoming agency budget tightening.

Earnings History Quarter EPS Surprise 1-Day Move 1-Week Move 30-Day Move Q4 25 +3.37% +0.24% -12.08% -3.03% Q3 25 +13.00% -1.65% -8.12% -11.80% Q2 25 +14.63% -2.75% -5.33% -11.67% Q1 25 +5.36% +0.71% +2.06% +9.46% On average, shares moved -5.87% one week after earnings over the past year.

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