Track market-moving stories before they get noisy

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.

powered by

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.

Today's Change

(

0.08

%) $

0.10

Current Price

$

127.54

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.

Today's Change

(

-1.05

%) $

-1.25

Current Price

$

116.90

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.

Today's Change

(

-0.98

%) $

-4.84

Current Price

$

487.98

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.

Today's Change

(

0.75

%) $

1.44

Current Price

$

192.43

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.

You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.

Author of the Tech Memo newsletter

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].

Read next

Alistair Barr You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.

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.

Today's Change

(

7.38

%) $

6.79

Current Price

$

98.73

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

Live

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.

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.

Contact [email protected] for any questions or corrections.

-

Nearly all 50 U.S. states join ~90% of the Fortune 500 in putting AI to work with the ServiceNow AI Platform

California, Hawaii, North Carolina, and Washington, D.C. are among the state and local agencies using ServiceNow to improve citizen experiences and modernize operations

SANTA CLARA, Calif.--(BUSINESS WIRE)-- ServiceNow (NYSE: NOW), the AI control tower for business reinvention, today announced strong momentum in the public sector, with nearly all 50 U.S. states transforming mission outcomes with the ServiceNow AI Platform. State and local agencies in California, Hawaii, North Carolina, and Washington, D.C. are among those using the ServiceNow AI Platform to help deliver better citizen services and modernized operations on a trusted and integrated government-grade platform designed for the scale and efficiency public sector missions demand.

With the ServiceNow AI Platform, we're creating one unified front door for employee requests, so our workforce can spend less time navigating systems and more time serving the District.

ShareTurning government complexity into coordinated action

ServiceNow helps state and local governments modernize operations, unlock the value of their data, and strengthen cybersecurity, designed to deliver strong ROI on every dollar invested. With an autonomous workforce of AI specialists, employees gain a teammate to work alongside them—helping to cut wait times on things like permits, benefits, and constituent requests—all while maintaining government-grade security across any cloud, AI model, data source, and system.

“State and local leaders are redefining what government can deliver, and ServiceNow is proud to be the platform making it possible,” said Mike Hurt, group vice president of U.S. Public Sector at ServiceNow. “We bring AI that's governed by design through our AI Control Tower, built to scale across agency missions, and designed to keep humans in the loop so agencies can earn and keep the citizen trust their missions depend on.”

Putting AI to work for mission-critical services

State and local agencies are achieving durable value ROI from the ServiceNow AI Platform, including:

California: The California Housing Finance Agency (CalHFA) is using ServiceNow’s AI-powered Public Sector Digital Services to provide AI assistance to human call center agents and agentic AI ticket resolution to help manage thousands of calls and questions related to services they provide: low-interest rate home loans, down payment assistance, and financing for the development of affordable rental and ownership housing. With ServiceNow’s multi-channel self-service capabilities, auto-generated case summaries, and AI-powered case resolution, CalHFA has reduced costs while improving the citizen experience.Hawaii: Launched the ServiceNow AI Platform in just six weeks, establishing a shared enterprise service platform for the State of Hawaii. The platform reflects the State's vision for digital transformation. Today, it powers the statewide HIP help desk, AI-enabled self-service, knowledge management, and enterprise IT service management, creating a scalable foundation for future statewide adoption.North Carolina: The City of Raleigh became the first municipal government to deploy ServiceNow’s L1 AI Specialist in production, with no in-house AI engineering bench behind it. The city is using ServiceNow AI agents to route service tickets with precision and speed, cutting service desk costs by 66% and returning more than 1,300 staff hours a year. Now they’re extending that same AI-powered service to all 500,000 residents.Washington, D.C.: The Office of the Chief Technology Officer (OCTO) is replacing a patchwork of contact center and workflow tools with the ServiceNow AI Platform, using EmployeeWorks to give every DC Government employee a single conversational entry point for service requests and agentic AI to automate fulfillment on the backend. The new experience is expected to enable employees to resolve most routine requests on their own, reducing wait times and allowing IT and HR teams to focus on more complex work. OCTO is also extending the platform to grants management with Public Sector Digital Services, targeting reducing processing time in half and clearer visibility for agencies overseeing awards. OCTO also plans to use ServiceNow AI Control Tower to gain visibility into every AI model and agent in production, helping govern AI at scale.“Our ServiceNow AI Platform represents the new path we're charting for the future of government in Hawaii,” said Darren Cantrill, information system manager, State of Hawaii. “In just six weeks, we built a shared enterprise service platform that's already changing how agencies collaborate and how quickly we can respond to the people we serve. This is just the beginning of our modernization journey, creating a foundation that agencies across Hawaii can continue to build upon.”

“We are a long-time ServiceNow customer and we've continued to expand our use of the platform to transform how we serve both employees and our community,” said Mark Wittenburg, chief information officer, City of Raleigh. “Today, ServiceNow AI agents are autonomously resolving nearly half of our IT support requests, and our goal is to reach 85% as we continue to automate routine work and empower our teams to focus on more complex, high-value services. Together, we're building a more efficient, responsive government while taking a thoughtful, responsible approach to AI that puts people first.”

“Our goal is to make DC Government simpler on the front end and smarter on the back end,” said Stephen N. Miller, chief technology officer, the District of Columbia. “With the ServiceNow AI Platform, we're creating one unified front door for employee requests, so our workforce can spend less time navigating systems and more time serving the District. On that same platform, we're reimagining grants management, where we expect to reduce processing time by 60 percent. All of this is built on the foundation of DC's AI Values—and with AI Control Tower giving us visibility across every AI agent and model in production, we're building government that's simpler, faster, and more trusted.”

About ServiceNow

ServiceNow (NYSE: NOW) is the AI control tower for business reinvention. The ServiceNow AI Platform integrates with any cloud, any model, and any data source to orchestrate how work flows across the enterprise. By unifying legacy systems, departmental tools, cloud applications, and AI agents, ServiceNow provides a single pane of glass that connects intelligence to execution across every corner of business. With more than 100 billion workflows running on the platform each year, ServiceNow helps organizations turn fragmented operations into coordinated, autonomous workflows that deliver measurable results. Learn how ServiceNow puts AI to work for people at www.servicenow.com.

© 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.

More News From ServiceNow

Back to Newsroom

Here’s a look at the key metrics from the quarter.

NOW stock is moving. Watch the price action here. ServiceNow reported quarterly earnings of 90 cents per share, which beat the Street estimate of 85 cents, according to Benzinga Pro data.

Quarterly revenue clocked in at $3.99 billion, which beat the analyst consensus estimate of $3.93 billion and was up from $3.22 billion in the same period last year.

ServiceNow reported the following second-quarter highlights:

“ServiceNow’s exceptional Q2 results solidify our position as the fastest-growing major enterprise software and cybersecurity company,” said ServiceNow CEO Bill McDermott.

“The company’s sterling fundamentals have us operating to the Rule of 56, well on our way to the Rule of 60,” McDermott added.

NOW Stock Price Activity: According to data from Benzinga Pro, ServiceNow stock was up 4.78% to $100 in Wednesday’s extended trading.  

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs

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

To add Benzinga News as your preferred source on Google, click here.

ServiceNow Inc (NYSE:NOW, XETRA:4S0) is expected to report a solid second-quarter performance, with Jefferies analysts forecasting results above guidance for key subscription metrics and a potential increase to its full-year subscription revenue outlook, supported by strong execution, early customer renewals and AI-related demand.

Ahead of the company's earnings release, Jefferies expects ServiceNow to report second-quarter subscription revenue and constant currency current remaining performance obligations (cRPO) above its guidance, helped by strong execution and customers renewing contracts ahead of planned price increases.

The firm also expects the company to meet third-quarter cRPO expectations and raise its full-year 2026 subscription revenue guidance, supported by early renewals and continued adoption of its NowAssist AI products.

Jefferies expects stronger-than-guided results to be supported by healthy partner activity, early renewals before pricing changes in Australia, improving customer decision-making in Europe, and contributions from recent acquisitions.

The firm also forecast an operating margin beat of around two percentage points, citing lower-than-expected operating expense growth excluding acquisition-related costs.

Feedback from channel partners pointed to stronger-than-expected customer renewal activity during the quarter, as some organizations sought to secure existing pricing before new product packaging and pricing took effect on July 1 in Australia.

Partners also reported growing interest in ServiceNow's NowAssist AI offering, with some enterprise customers making seven-figure commitments ahead of broader deployments. Jefferies said demand continued to be supported by IT operations management and IT service management products, while the company was also seeing success cross-selling its customer relationship management offerings.

Looking ahead, Jefferies expects ServiceNow to issue third-quarter cRPO guidance broadly in line with market expectations while increasing its full-year subscription revenue outlook to reflect stronger second-quarter performance and improved visibility into the second half of the year.

The firm added that investor reaction is likely to depend on the strength of the earnings beat and any signs that demand remains sustainable following the pull-forward of renewals ahead of price increases. Jefferies also said it continues to view the stock's risk-reward profile favorably at current valuation levels.

ServiceNow shares traded down 3% at $102 on Tuesday, down more than 33% so far this year.

Wall Street expects a year-over-year increase in earnings on higher revenues when ServiceNow (NOW - Free Report) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 22. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.

Zacks Consensus EstimateThis maker of software that automates companies' technology operations is expected to post quarterly earnings of $0.86 per share in its upcoming report, which represents a year-over-year change of +4.9%.

Revenues are expected to be $3.92 billion, up 22% from the year-ago quarter.

Estimate Revisions TrendThe consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.

Price, Consensus and EPS Surprise

Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for ServiceNow?For ServiceNow, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +0.59%.

On the other hand, the stock currently carries a Zacks Rank of #4.

So, this combination makes it difficult to conclusively predict that ServiceNow will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that ServiceNow would post earnings of $0.95 per share when it actually produced earnings of $0.97, delivering a surprise of +2.11%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

ServiceNow doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

ServiceNow (NOW 1.09%) stock dropped 36% in the first half of the year, according to data provided by S&P Global Market Intelligence. The market has been worried about the impact of agentic artificial intelligence (AI) on software-as-a-service (SaaS) stocks like ServiceNow, but ServiceNow is pushing back with its own AI platform.

Out with SaaS, in with AI? ServiceNow is a major player in organizational management, with more than 8,800 clients who rely on it to manage their workflows. Its platform is embedded into these clients' databases, unifying and automating various workplace processes.

When agentic AI first came out on a major scale a few months back, SaaS stocks plunged. The market has been worried about how SaaS companies will fare if clients can get the same value through AI agents that can be customized to do the same thing.

Image source: Getty Images.

ServiceNow has been ahead of the curve, and it launched its Control Tower product just over a year ago. The Control Tower acts, as the name implies, as a single point connecting all of the client's AI agents and platforms, as well as the rest of the organization. And it uses AI to analyze how it all works and provide insights. After all, even if AI agents can take care of the work of some employees, companies still need to set up, monitor, and manage them. And since it's also based in AI and machine learning, it's continually upgraded to improve along with advances in technology.

At least for now, the response has been positive, and ServiceNow hasn't seen a disruption in its business. It reported a 22% year-over-year increase in subscription revenue in the 2026 first quarter, and management is guiding for similar growth in the second quarter and for the full year.

Today's Change

(

-1.09

%) $

-1.17

Current Price

$

106.61

Is ServiceNow stock priced to buy? At the current price, ServiceNow stock trades at 64 times trailing 12 months. That's a hefty price tag, but it's actually a lot lower than it's been over the past few years. In fact, it's just off its lowest P/E ratio ever as it starts to climb back higher. Investors have been willing to pay a high premium for the stock, since it has a strong economic moat as the platform of choice for a large percentage of the country's top companies.

That kind of valuation can hardly be called a bargain, especially in the changing AI landscape, but it could still be a defensive play as more workflow goes toward AI, and investors could feel comfortable taking a small position right now.

ServiceNow stock is gaining positive traction. What’s pushing NOW stock higher? What Is Driving ServiceNow’s Stock Momentum?The move follows ServiceNow’s rollout with Accenture of two AI-focused offerings: managed security services built on the ServiceNow AI Platform and an Accenture AI-powered automation solution aimed at lowering the cost and complexity of modernizing enterprise risk and security operations. The news flow also includes an upgrade to Buy from Guggenheim, which framed the pullback as a better entry setup.

Critical Price Levels To Watch For NOW StockThe bigger-picture chart is still in repair mode: the stock is down 47.86% over the past 12 months and remains 15.9% below its 200-day SMA ($132.45), which is why rallies can still face "prove it" price action. That said, the near-term trend has improved with shares trading 9.7% above the 20-day SMA ($101.54), 11.2% above the 50-day SMA ($100.25), and 8.3% above the 100-day SMA ($102.88).

Momentum looks like it’s trying to turn the corner using MACD as the cleaner read here: MACD is above its signal line and the histogram is positive, which points to improving upside pressure versus the prior downswing. In plain terms, when MACD is above the signal line, it suggests downside momentum is fading and buyers are gaining traction.

The moving-average structure is mixed, which fits the "bounce vs. trend reversal" debate. The 20-day SMA is above the 50-day SMA (bullish), but the death cross from August 2025 (50-day below 200-day) is still a longer-term headwind until price can reclaim and hold that long average.

Key Resistance: $126.50 — a nearby ceiling that lines up closely with the 200-day EMA ($126.10), a common area where countertrend rallies can stall Key Support: $89.50 — a prior demand zone that sits above the 52-week low area ($81.24), making it a key "last line" if the bounce fails How ServiceNow Operates in the SaaS MarketServiceNow provides software solutions to structure and automate various business processes via a SaaS delivery model, with a core focus on the IT function for enterprise customers. It started in IT service management, expanded across IT workflows, and has pushed workflow automation into customer service, HR service delivery, and security operations.

That backdrop matters for the Accenture tie-up because security operations and risk workflows are areas where large enterprises often want packaged solutions plus implementation help. Partnerships that bundle platform software with services can shorten adoption cycles, but the stock still needs follow-through on monetization to shift the longer-term trend.

ServiceNow Earnings Preview for July 2026Looking further out, the next major catalyst for the stock arrives with the July 22, 2026 (confirmed) earnings report.

EPS Estimate: 76 cents (Down from 82 cents YoY) Revenue Estimate: $3.93 Billion (Up from $3.21 Billion YoY) Valuation: P/E of 64.2x (Indicates premium valuation relative to peers) Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price target of $138.21. Recent analyst moves include:

Guggenheim: Upgraded to Buy (Target $125.00) (July 1) BTIG: Buy (Maintains Target $150.00) (June 29) Benchmark: Buy (Raises Target $130.00) (June 15) ServiceNow’s Benzinga Edge Scorecard BreakdownBelow is the Benzinga Edge scorecard for ServiceNow, highlighting its strengths and weaknesses compared to the broader market:

The Verdict: ServiceNow’s Benzinga Edge signal reveals a growth-heavy profile with weak value and weak momentum, meaning the setup can work, but it tends to need sustained upside follow-through to justify the premium. For longer-term bulls, reclaiming the 200-day area is the cleaner "trend repair" tell; for risk control, the $89.50 zone is the key downside level to monitor.

ServiceNow Stock Price Movement NOW Stock Price Activity: ServiceNow shares were up 3.40% at $111.60 at the time of publication on Tuesday, according to Benzinga Pro data.

Image: Shutterstock

Market News and Data brought to you by Benzinga APIs

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

To add Benzinga News as your preferred source on Google, click here.

ServiceNow (NOW +0.49%) stock fell 20% in June, according to data provided by S&P Global Market Intelligence. It's been fairly volatile as the market weighs the impact of artificial intelligence (AI) on its business and how it should be valued today, and the drop was on the heels of a 41% rebound in May.

Does AI help, or hinder? As a category, software-as-a-service (SaaS) stocks have been falling as the market recognizes that agentic AI can be used to accomplish many of the tasks they're used for for free or more inexpensively. The idea behind SaaS is that clients pay a monthly fee for services that include upgrades and customer support, but if developers can create AI agents that take care of the same work, the SaaS products can become obsolete.

Image source: Getty Images.

ServiceNow has been fighting this theory with an AI-included platform that management claims provides great value for its clients. Its Control Tower product, which was already in progress before agentic AI became the threat it is right now, supervises all of a client's operations, including agentic AI, unifying its management and keeping the business, and its AI tools, safe.

Based on the company's current performance, worries about an AI takeover are far overblown. The company is as strong as ever, with $3.7 billion in subscription revenue in the 2026 first quarter, a 22% increase year over year, and $27.7 billion in remaining performance obligations (RPO), up 25%. It's highly profitable, with strong cash flow, and it's guiding for similar performance for the rest of the year.

Its platform is embedded within its 8,500 clients' operations, a strong economic moat with high barriers to entry, and its focus on pre-emptive AI measures protects its business.

The view from the market The stock was propelled higher in May after a bullish analyst rating, but the market is still weighing the opportunity. On the one hand, it's in a healthy position and reporting outstanding results. On the other hand, the AI landscape continues to shift rapidly, and it's unclear how it will ultimately impact ServiceNow.

Adding to the mix, the company has a dominant position in its category and is growing at double-digit rates, but it's past its upstart phase. The valuation piece fits in there, too -- ServiceNow stock trades at a P/E ratio of 63 and a price-to-sales ratio of 8, which makes it expensive. It's reasonable to see the stock slide at this valuation, and even if it still has a bright future, it comes at a premium.

ServiceNow (NOW +6.57%) has been one of the hardest-hit large-cap software stocks in 2026. After setting a split-adjusted 52-week high of $211.48 last summer, shares of the enterprise workflow software company have fallen about 50%, to around $105 as of this writing. The cause wasn't the business, but rather a marketwide fear that artificial intelligence (AI) would disrupt the software industry, letting customers swap pricey subscriptions for AI agents that do the same work.

Lately, that fear has eased, and the stock has climbed nearly 30% off its low. So is this beaten-down software leader finally a buy, or has the bounce already run too far?

Image source: Getty Images.

An AI winner, not a victim The bull case starts with how little the AI scare actually shows up in ServiceNow's results.

ServiceNow's first quarter of 2026 was strong by pretty much every measure. Subscription revenue rose 22% year over year (19% in constant currency) to $3.67 billion. And current remaining performance obligations (cRPO) -- contracted revenue the company expects to book over the next 12 months, and a useful read on near-term demand -- climbed 22.5% to $12.64 billion. Bigger deals, specifically, grew faster still: ServiceNow closed 16 transactions worth more than $5 million in net new annual contract value in the quarter, up nearly 80% from a year earlier.

More important for the AI debate, AI is landing as a tailwind, not a threat. Now Assist, ServiceNow's suite of generative AI features, is tracking toward about $1.5 billion in annual contract value for 2026 -- well above management's original $1 billion target. And customers spending more than $1 million a year on Now Assist grew more than 130% year over year.

"There has never been a tailwind for ServiceNow like AI," said CEO Bill McDermott on the company's first-quarter earnings call.

There's also a structural reason the AI-disruption worry may be overdone here. About half of ServiceNow's net new business now comes from pricing that isn't tied to user seats -- consumption-based models built around tokens, infrastructure, and connectors, McDermott said. The bear case assumes AI shrinks headcount, and with it the seats software vendors bill against. But when customers pay for how many workflows run on the platform, more automation can mean more usage, not less.

ServiceNow has leaned into that position. In January, it signed a multi-year agreement to make OpenAI's models a preferred option across the more than 80 billion workflows that run on its platform each year. The recent rebound in software stocks even has a tidy catalyst: in late June, the White House reportedly asked OpenAI to limit its most powerful new model to a small group of vetted partners, cooling fears that frontier AI would instantly commoditize enterprise software.

Today's Change

(

6.57

%) $

6.53

Current Price

$

105.81

The valuation still isn't a bargain Here's the harder part. Even after a sell-off this steep, ServiceNow doesn't look cheap. The stock trades at a forward price-to-earnings ratio of about 24 and a price-to-sales ratio of about 7. Both have compressed sharply -- the price-to-sales figure sat closer to 8 earlier this year, and far higher in years past. But neither is a bargain for a business whose growth, while strong, is gradually slowing from the high-20s rates of a few years ago.

Even more, the company's outlook looks good. For all of 2026, management guided for subscription revenue of about $15.75 billion, up more than 20%, and ServiceNow turns much of that into cash, posting a 44% free cash flow margin in the first quarter.

Still, this is a high-risk stock. The AI uncertainty that crushed shares this year hasn't been resolved so much as quieted, and another scare could send software names lower again.

So, with shares still down about 50% from their 52-week highs, a small position could make sense for investors who want exposure to a software company that is monetizing AI rather than being displaced by it. But I'd keep it modest. Shares aren't cheap enough yet to make this an easy call. And in a corner of the market moving this fast, paying up for even a strong business still carries plenty of risk.

Editor’s note: This story has been updated to include additional context from Guggenheim’s analyst note.

ServiceNow stock is surging to new heights today. What’s behind NOW gains? What Is Driving ServiceNow’s AI-Powered Offerings?ServiceNow and Accenture rolled out two offerings: managed security services built on the ServiceNow AI Platform and an Accenture AI-powered automation solution designed to reduce the cost and complexity of modernizing enterprise risk and security operations.

The companies tied the push to a faster threat cycle—saying AI has compressed the time between vulnerability discovery and exploitation from months to hours—and pointed to U.S. data breach costs hitting $10.22 million per incident in 2025, up 9%.

Why Guggenheim Turned Bullish on ServiceNowCritical Price Levels To Watch For NOW StockThe premarket pop is happening inside a still-damaged longer-term chart: the stock is down 50.94% over the past 12 months and is trading 22.5% below its 200-day SMA ($133.66), which keeps the bigger trend cautious until price can reclaim that long average.

Near term, the setup is more constructive, with shares trading above the 50-day SMA ($99.90) and the 100-day SMA ($102.76), while sitting basically on top of the 20-day SMA ($103.78)—a spot that often decides whether a bounce turns into follow-through or fades back into chop.

RSI is the cleaner momentum read right now at 48.10, which is neutral and suggests the move isn’t "stretched" yet; in plain English, RSI helps gauge whether buying or selling has become overheated.

The mixed moving-average backdrop explains the two-way trade: the 20-day SMA is above the 50-day SMA (bullish), but the death cross from August 2025 (50-day below 200-day) still argues rallies may need repeated confirmation.

Key Resistance: $111.00 — a nearby round-number area where rebounds can stall Key Support: $85.50 — a prior demand zone that sits above the 52-week low area ($81.24) How ServiceNow Automates Business ProcessesServiceNow provides software solutions to structure and automate various business processes via a SaaS delivery model, with a core focus on IT workflows for enterprise customers. It started in IT service management and has expanded its workflow automation into customer service, HR service delivery, and security operations.

That backdrop matters for today’s news because security and risk modernization is a natural extension of the company’s "single platform" pitch—using the same workflow and automation logic to replace older, fragmented tools.

Pairing with Accenture also speaks to how these platforms get adopted in large enterprises, where implementation and managed services can be as important as the software itself.

ServiceNow Earnings Preview for July 2026Looking further out, the next major catalyst for the stock arrives with the July 22, 2026 (estimated) earnings report.

EPS Estimate: 76 cents (Down from 82 cents YoY) Revenue Estimate: $3.93 billion (Up from $3.21 billion YoY) Valuation: P/E of 59.1x (Indicates premium valuation relative to peers) Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price target of $138.21. Recent analyst moves include:

Guggenheim: Upgraded to Buy (Target $125.00) (July 1) BTIG: Buy (Maintains Target to $150.00) (June 29) Benchmark: Buy (Raises Target to $130.00) (June 15) What Would $1,000 Invested In NOW Be Worth?A $1,000 investment in ServiceNow on July 1, 2021, would have been worth $911 on June 30, 2026—a total return of -8.9% over the period. The stake swung between $627 and more than $2,000, ending well below its 2025 peak.

The ride included a deep drawdown, with the position hitting its period low on October 14, 2022, and a maximum drawdown of -64.5% along the way. Momentum later reversed, culminating in a period high on January 28, 2025, before the investment finished the five-year window at $911 on June 30, 2026.

On an annualized basis, ServiceNow returned -1.9% over the holding period, lagging the S&P 500’s 11.7% annualized return and the Nasdaq 100’s 15.8%. Among the listed peers, Meta Platforms, Inc. was the standout, posting a 106.2% annualized return over the same timeframe.

Today, SERVICENOW, INC. has a market capitalization of about $107.6 billion. The stock’s current P/E ratio is 59.1.

ServiceNow Benzinga Edge Rankings ExplainedBelow is the Benzinga Edge scorecard for ServiceNow, highlighting its strengths and weaknesses compared to the broader market:

The Verdict: ServiceNow’s Benzinga Edge signal reveals a growth-heavy profile with weak momentum and weak value, meaning the bull case leans on execution and continued demand rather than "cheap" pricing. For longer-term trend followers, the key technical tell is whether the stock can build above the $111.00 area and start working back toward its 200-day moving average.

NOW Stock Price Movement Wednesday MorningNOW Stock Price Activity: ServiceNow shares were up 3.45% at $102.71 on Wednesday, according to Benzinga Pro data.

Image: Shutterstock

Market News and Data brought to you by Benzinga APIs

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

To add Benzinga News as your preferred source on Google, click here.