ServiceNow trades at nearly 100 times earnings with agentic AI hype at a fever pitch, but one soft number on Wednesday could reprice the stock overnight the way a slim Q1 beat already cost investors 17%.
ServiceNow (NYSE:NOW | NOW Price Prediction) reports third-quarter results on Wednesday, October 28, after the close. Shares climbed 11.97% over the past week, so expectations for agentic AI are running hot going into the report.
AI Momentum Meets a Federal Timing Hangover
Last quarter, ServiceNow posted non-GAAP EPS of $0.90 against a $0.8564 consensus, its sixth straight beat. Revenue rose 24.0% to $3.987 billion. ServiceNow AI crossed $1 billion in annual contract value, and agentic deployments rose ninefold in nine months.
That beat came with a catch. Management said about half of it came from U.S. Federal on-premise revenue pulled forward from Q3, and it highlighted a ~$35 million FX drag to Q3 cRPO. Guidance calls for subscription revenue of $3,975 million to $3,980 million, cRPO growth of 19.5%, and a 31% non-GAAP operating margin.
The stock is up 12.91% over the past month but still down 15.37% over the past year.
AI Contract Value and cRPO Will Decide the Multiple
AI contract value comes first on my watch list. Management said it is on track to beat its $1.5 billion year-end target, and AI net new ACV grew over 40% sequentially in Q2. Updates on Level 1 AI specialists, which close 80% to 85% of service requests without human help, support the goal of 30% of ACV from AI by 2030.
cRPO comes next. ServiceNow entered the back half with about $29 billion in RPO and $13.2 billion in cRPO. The question is whether growth holds near guidance despite the stronger dollar.
The structural debate centers on pricing. Bears argue AI agents reduce seat counts. McDermott said 50% of net new business is already non-seat-based, and AI-native SKUs carry 20% to 30% price increases. Management summed it up: “Customers aren’t paying us for tokens. They’re paying for resolutions.”
Margins round out my list. The 81% subscription gross margin guide reflects hyperscaler and AI consumption costs. Integration of Moveworks, Veza, and Armis drove GAAP operating income down 54.75% to $162 million last quarter.
Premium Valuation Leaves Little Room for a Stumble
ServiceNow carries a trailing P/E of 96, part of a range of about 80x to 96x that already assumes AI growth keeps compounding. History shows how quickly opinion can turn. After Q1’s slim 0.35% beat, shares fell 17.75% on report day. McDermott called the platform “the foundation for a re-rating of ServiceNow.” Clean AI and cRPO numbers on Wednesday would give that claim real weight.
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ServiceNow (NOW - Free Report) ended the recent trading session at $158.62, demonstrating a +1.03% change from the preceding day's closing price. This move outpaced the S&P 500's daily loss of 0.52%. At the same time, the Dow lost 1.24%, and the tech-heavy Nasdaq lost 0.21%.
Heading into today, shares of the maker of software that automates companies' technology operations had gained 13.95% over the past month, outpacing the Computer and Technology sector's loss of 7.7% and the S&P 500's loss of 1.21%.
The investment community will be closely monitoring the performance of ServiceNow in its forthcoming earnings report. The company is scheduled to release its earnings on October 28, 2026. On that day, ServiceNow is projected to report earnings of $1.02 per share, which would represent year-over-year growth of 6.25%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.09 billion, up 19.96% from the year-ago period.
For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $4.06 per share and a revenue of $16.17 billion, representing changes of +15.67% and +21.8%, respectively, from the prior year.
Investors should also take note of any recent adjustments to analyst estimates for ServiceNow. These recent revisions tend to reflect the evolving nature of short-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.
Based on our research, we believe these estimate revisions are directly related to near-term stock moves. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, there's been no change in the Zacks Consensus EPS estimate. As of now, ServiceNow holds a Zacks Rank of #5 (Strong Sell).
In terms of valuation, ServiceNow is presently being traded at a Forward P/E ratio of 38.66. This expresses a premium compared to the average Forward P/E of 16.03 of its industry.
We can additionally observe that NOW currently boasts a PEG ratio of 1.58. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As the market closed yesterday, the Computers - IT Services industry was having an average PEG ratio of 1.38.
The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 104, putting it in the top 43% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.
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.
Investors looking for stocks in the Computers - IT Services sector might want to consider either TD SYNNEX (SNX - Free Report) or ServiceNow (NOW - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
TD SYNNEX has a Zacks Rank of #1 (Strong Buy), while ServiceNow has a Zacks Rank of #5 (Strong Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SNX has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SNX currently has a forward P/E ratio of 11.65, while NOW has a forward P/E of 38.66. We also note that SNX has a PEG ratio of 0.47. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NOW currently has a PEG ratio of 1.58.
Another notable valuation metric for SNX is its P/B ratio of 2.12. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NOW has a P/B of 12.97.
These metrics, and several others, help SNX earn a Value grade of B, while NOW has been given a Value grade of F.
SNX stands above NOW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SNX is the superior value option right now.
ServiceNow Inc. (NYSE:NOW) received a bullish endorsement from Bank of America on Friday, as the firm raised its price forecast ahead of the software company’s third-quarter earnings report.
Bank of America analyst Tal Liani maintained a Buy rating and raised the price forecast to $180 from $150.
The analyst expects rising demand for artificial intelligence-powered business automation to support ServiceNow’s revenue growth and customer spending.
AI Adoption Could Drive Next Wave of GrowthLiani believes ServiceNow is well positioned to benefit as businesses move beyond basic AI automation toward more complex workflows.
The company’s established workflow platform, customer relationships and enterprise data infrastructure could give it an advantage over competing AI providers.
ServiceNow’s AI Control Tower, AI-native products and new AI Specialists could also drive adoption across IT, customer relationship management, employee services and cybersecurity.
Bank of America sees a cost advantage for ServiceNow because its platform already contains much of the data needed to deploy AI agents.
Competing providers may face additional expenses to extract, organize and reintegrate enterprise data.
The firm raised its valuation multiple to 27 times estimated 2027 enterprise value to free cash flow from 23 times, reflecting expectations for broader AI adoption and additional customer spending.
Corporate Spending Survey Supports Bullish OutlookBank of America’s October survey of chief information officers showed sustained demand for IT services and growing interest in AI.
The survey found that 42% of respondents ranked IT service management and IT operations management among their five biggest spending priorities.
Meanwhile, 54.5% said they were likely or very likely to use ServiceNow for back-office AI applications.
About 36% of respondents expected AI to account for more than 10% of their software budgets.
However, broader software spending growth could remain modest. About 31% of respondents expected budget increases of 1% to 5% in 2027, while 27% anticipated growth of 6% to 10%.
The findings suggest ServiceNow could benefit from both its established enterprise software business and rising corporate investment in AI.
ServiceNow Earnings: Wall Street Expects Revenue GrowthServiceNow confirmed that it will report third-quarter financial results after the market closes Wednesday, Oct. 28.
Wall Street expects earnings of $1.03 per share, up from 96 cents a year earlier. Revenue is expected to rise to $4.09 billion from $3.41 billion in the year-ago quarter.
Bank of America projects subscription revenue growth of 20.6% year over year to approximately $3.98 billion, including 18.5% organic growth.
The firm also expects current remaining performance obligations, a measure of contracted revenue expected to be recognized over the next 12 months, to grow 20% in constant currency.
Investors will closely watch ServiceNow’s progress toward its $1.5 billion annual contract value goal for AI products in fiscal 2026.
Bank of America expects some pressure on gross margins, although operating efficiencies could help offset the impact. The firm forecasts a third-quarter operating margin of 31.1%.
Wall Street Analysts Turn More BullishServiceNow carries an average analyst price forecast of $158.72, with a Buy consensus rating.
Several Wall Street firms have recently raised their forecasts ahead of the company’s earnings announcement.
On Friday, Guggenheim maintained its Buy rating and raised its price forecast to $175.
Truist Securities maintained a Buy rating and lifted its forecast to $180 on Wednesday, Oct. 21.
StoneX also maintained a Buy rating and raised its forecast to $165 on Monday, Oct. 19.
The upgrades reflect growing analyst optimism about ServiceNow’s AI opportunities and enterprise software demand.
Premium Valuation Remains a RiskDespite the bullish outlook, ServiceNow trades at a price-to-earnings ratio of 98.1, reflecting a premium valuation.
Bank of America warned that the stock could face pressure if bookings disappoint or investor sentiment weakens.
The firm also highlighted competition, slower enterprise software spending and rising AI infrastructure costs as potential risks.
Additionally, customers may increasingly expect AI capabilities to be included in existing subscriptions rather than purchased separately, potentially limiting revenue opportunities.
Still, Bank of America believes ServiceNow’s enterprise relationships, established workflow platform and expanding AI capabilities position the company to capture a larger share of corporate technology spending.
NOW Price Action: ServiceNow shares were down 0.13% at $156.05 at the time of publication on Friday, according to Benzinga Pro data.
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 >>>> .
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Boothe Investment Group Inc. boosted its holdings in ServiceNow, Inc. (NYSE:NOW – Free Report) by 3.9% during the 3rd quarter, according to the company in its most recent disclosure with the SEC. The fund owned 102,286 shares of the information technology services provider’s stock after buying an additional 3,881 shares during the quarter. ServiceNow accounts for about 3.3% of Boothe Investment Group Inc.’s investment portfolio, making the stock its 13th largest position. Boothe Investment Group Inc.’s holdings in ServiceNow were worth $13,707,000 as of its most recent filing with the SEC.
Other institutional investors also recently modified their holdings of the company. Cornerstone Financial Management LLC increased its stake in ServiceNow by 72.8% in the 2nd quarter. Cornerstone Financial Management LLC now owns 254 shares of the information technology services provider’s stock worth $25,000 after purchasing an additional 107 shares in the last quarter. CrossGen Wealth LLC purchased a new stake in ServiceNow during the first quarter valued at about $29,000. Caitong International Asset Management Co. Ltd lifted its stake in ServiceNow by 4,157.1% during the fourth quarter. Caitong International Asset Management Co. Ltd now owns 298 shares of the information technology services provider’s stock valued at $46,000 after buying an additional 291 shares in the last quarter. Marquette Asset Management LLC lifted its stake in ServiceNow by 75.0% during the second quarter. Marquette Asset Management LLC now owns 301 shares of the information technology services provider’s stock valued at $30,000 after buying an additional 129 shares in the last quarter. Finally, Kilter Group LLC acquired a new position in shares of ServiceNow in the second quarter worth about $31,000. Institutional investors own 87.18% of the company’s stock.
ServiceNow Trading Up 2.4% NYSE:NOW opened at $156.85 on Friday. The company has a debt-to-equity ratio of 0.43, a current ratio of 0.70 and a quick ratio of 0.70. ServiceNow, Inc. has a fifty-two week low of $81.24 and a fifty-two week high of $192.97. The stock’s 50-day moving average is $137.17 and its two-hundred day moving average is $115.08. The stock has a market cap of $162.18 billion, a PE ratio of 98.03, a price-to-earnings-growth ratio of 2.81 and a beta of 0.99.
ServiceNow (NYSE:NOW – Get Free Report) last posted its quarterly earnings results on Wednesday, July 22nd. The information technology services provider reported $0.90 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.86 by $0.04. The business had revenue of $3.99 billion during the quarter, compared to analyst estimates of $3.93 billion. ServiceNow had a net margin of 11.34% and a return on equity of 16.45%. The firm’s revenue was up 24.0% compared to the same quarter last year. During the same period in the prior year, the firm earned $0.81 earnings per share. As a group, equities research analysts forecast that ServiceNow, Inc. will post 2.22 earnings per share for the current fiscal year. Insider Activity at ServiceNow In other ServiceNow news, insider Paul Fipps sold 2,034 shares of the company’s stock in a transaction that occurred on Monday, August 31st. The shares were sold at an average price of $147.87, for a total value of $300,767.58. Following the transaction, the insider owned 18,305 shares in the company, valued at approximately $2,706,760.35. This represents a 10.00% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Also, insider Jacqueline Canney sold 7,847 shares of the stock in a transaction that occurred on Friday, August 28th. The stock was sold at an average price of $138.00, for a total transaction of $1,082,886.00. Following the completion of the sale, the insider owned 30,042 shares of the company’s stock, valued at approximately $4,145,796. The trade was a 20.71% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 14,081 shares of company stock valued at $1,937,904. Corporate insiders own 0.34% of the company’s stock.
Key ServiceNow News Here are the key news stories impacting ServiceNow this week:
Positive Sentiment: AI partnership expands product reach: ServiceNow and NVIDIA launched Arc, an enterprise AI agent designed to plan tasks and verify its work. The product reinforces ServiceNow’s positioning as an AI orchestration and workflow platform. ServiceNow and Nvidia launch Arc Positive Sentiment: AI demand is driving investor optimism: ServiceNow’s AI-related contract value reportedly exceeded $1 billion, while the stock has gained substantially over the past three months. The company’s shift toward usage-based “Assists” could increase revenue potential as customers deploy more AI agents. ServiceNow rallies as AI contract value tops $1 billion Positive Sentiment: Analyst support remains strong: Multiple firms raised their price targets ahead of earnings, including a Street-high $266 target from Bernstein. Polen Capital also highlighted ServiceNow as a company positioned to benefit from AI rather than suffer disruption. ServiceNow earnings outlook Neutral Sentiment: Earnings are the next catalyst: Investors are focused on the October 28 quarterly report. ServiceNow previously delivered revenue growth of 24% and an earnings beat, but current previews anticipate a possible single-digit earnings decline, raising the bar for another positive surprise. ServiceNow quarterly earnings preview Neutral Sentiment: Defense exposure received visibility: ServiceNow’s global defense and national security executive discussed the company’s activities at the AUSA 2026 conference, though the report did not disclose a material contract or financial impact. AUSA ServiceNow defense interview Negative Sentiment: Cash-flow and valuation concerns remain: Commentary warns that ServiceNow may need stronger cash flow to fund its AI expansion. With the shares trading at a high earnings multiple after a sharp run-up, any slowdown or weaker outlook could trigger profit-taking. ServiceNow cash-flow concerns Negative Sentiment: One notable bearish signal: Zacks Research downgraded ServiceNow from “hold” to “strong sell,” adding caution despite the broader analyst optimism. Zacks Research ratings Wall Street Analyst Weigh In Several research analysts have recently weighed in on the stock. Jefferies Financial Group reissued a “buy” rating on shares of ServiceNow in a research report on Tuesday, October 13th. Stifel Nicolaus set a $160.00 price target on shares of ServiceNow and gave the company a “buy” rating in a research report on Tuesday, October 6th. Evercore reaffirmed an “outperform” rating on shares of ServiceNow in a research note on Tuesday, October 13th. Zacks Research cut shares of ServiceNow from a “hold” rating to a “strong sell” rating in a research report on Monday. Finally, Bank of America lifted their price objective on shares of ServiceNow from $130.00 to $150.00 and gave the stock a “buy” rating in a research report on Wednesday, August 19th. One research analyst has rated the stock with a Strong Buy rating, thirty-six have given a Buy rating, three have assigned a Hold rating and three have given a Sell rating to the company’s stock. Based on data from MarketBeat, ServiceNow presently has an average rating of “Moderate Buy” and an average target price of $153.90.
Check Out Our Latest Report on ServiceNow
About ServiceNow (Free Report)
ServiceNow, Inc provides cloud-based software designed to help organizations digitize, automate and manage enterprise workflows. Its Now Platform connects people, processes and systems across departments, enabling customers to manage work through a centralized technology environment.
The company’s products and services address a range of business needs, including information technology service management, IT operations management, customer service management, human resources service delivery, security operations, risk and compliance, and application development.
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The MSP deployed ServiceNow Technology Provider Service Management and AI agents to transform customer service
TPSM is the Service CRM for tech providers, with Service Exchange for real-time customer collaboration
SANTA CLARA, Calif. & FOXBOROUGH, Mass.--(BUSINESS WIRE)--ServiceNow (NYSE: NOW), the Super Intelligence Control Tower for business reinvention, today announced that Thrive, a leading managed services provider to small and mid-sized businesses, is transforming customer support from reactive incident response to proactive, AI-driven resolution with the ServiceNow AI Platform. By automating workflows, routing tasks intelligently, and deploying specialized AI agents, Thrive achieved 73% first-contact resolution rate.
The challenge: scaling support with less manual work
Thrive supports thousands of SMB and mid-market customers across multiple industries, managing their IT environments and providing specialized cybersecurity, AI, cloud, and managed services. As its customer base grew, Thrive needed to scale support quality without proportionally increasing manual work and escalations. Traditional ticketing workflows were creating delays, handoffs between teams and customer engineering resources, and preventing Thrive from delivering the responsiveness clients demand.
The solution: AI-powered customer service experience
To grow managed services offerings and deliver better IT support with less manual effort, Thrive first built its NextGen Platform on the ServiceNow AI Platform using Technology Provider Service Management (TPSM). TPSM is the Service CRM for technology providers and includes Service Exchange for real-time customer collaboration. From there, Thrive deployed AI agents to power work autonomously so customers received faster service and Thrive’s service teams could focus on the most critical cases.
Now, Thrive can centralize customer service, triage incidents at first contact, and provide engineers with complete visibility into customer environments – routing more than 315,000 tasks every six months using AI automation, saving 21,000 hours of manual work while improving every customer-facing business metric.
Key outcomes include:
73% first-contact resolution rate: Centralizing customer service and technical support enabled triage and resolution at first contact, with comprehensive dashboards giving teams complete visibility into customer environments. 63% reduction in time-to-resolution: AI-powered assignment and task intelligence automatically sort, route, and investigate incoming tickets, reducing connection time from six minutes to less than one minute. 99.2% customer satisfaction: Automated workflows handle routine requests like password resets, while generative AI case summaries enable engineers to jump straight to solutions, so customers get answers faster. 14,500+ engineer hours returned to customer-facing work: ServiceNow AI has generated over 92,000 automated assists (88,000 resolution notes alone), giving back an estimated 14,500+ hours of engineering capacity with 74% adoption across 1,000+ provisioned fulfillers. "We wanted a technology partner that could scale with our business. ServiceNow was a perfect match," says Scott Steele, Chief Operating Officer. "Our decision paid off and we're now delivering more effective services, faster, to help customers grow. We aim to use automation as much as we can to make our engineers' lives easier and bring better value to our customers."
"Customers demand support that responds and resolves at machine speed, without waiting for escalations. Thrive just proved you can deliver that at scale using ServiceNow TPSM," said Romit Ghose, Vice President and General Manager of Technology, Media, and Telcom Industry products at ServiceNow. "Better service with 14,500+ engineer hours returned. Now they can proactively solve problems before customers even know they exist."
Thrive’s newly released Nextgen 3.0 platform also includes ServiceNow's DEX Digital End-user Experience (DEX) capabilities with TeamViewer's remote connectivity technology. Together, the two platforms give Thrive's teams real-time visibility into device health and the end-user experience, along with the ability to remotely diagnose and resolve issues in the moment. This combination enables Thrive to meet clients wherever they are — proactively identifying and resolving issues before they disrupt a client’s flow of work, rather than waiting for a ticket to come in.
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.
About Thrive
Thrive is a NextGen 3.0 global technology outsourcing provider that empowers small and mid-market organizations to transform their technology into a strategic advantage. Offering a breadth of services from AI and cybersecurity to cloud, compliance, and traditional MSP/MSSP solutions, Thrive’s team of seasoned experts develop strategies that standardize, scale, and automate technology to achieve outsized ROI. From advisory services to a 24×7×365 SOC and NOC, Thrive provides end-to-end IT and cybersecurity management so clients can focus on innovation and growth. With Thrive, your business is always supported and always secure. Learn more at www.thrivenextgen.com or follow us on LinkedIn.
Zacks.com users have recently been watching ServiceNow (NOW) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Diversify Advisory Services LLC cut its stake in shares of ServiceNow, Inc. (NYSE:NOW – Free Report) by 5.4% during the third quarter, according to its most recent disclosure with the Securities & Exchange Commission. The firm owned 250,888 shares of the information technology services provider’s stock after selling 14,302 shares during the period. Diversify Advisory Services LLC’s holdings in ServiceNow were worth $37,274,000 at the end of the most recent quarter.
Other hedge funds have also modified their holdings of the company. Bank of Nova Scotia lifted its position in shares of ServiceNow by 53.3% in the 1st quarter. Bank of Nova Scotia now owns 1,018,036 shares of the information technology services provider’s stock valued at $106,436,000 after acquiring an additional 353,749 shares in the last quarter. Sapient Capital LLC boosted its stake in ServiceNow by 266.0% in the 2nd quarter. Sapient Capital LLC now owns 77,661 shares of the information technology services provider’s stock worth $7,710,000 after purchasing an additional 56,444 shares during the period. Meeder Advisory Services Inc. acquired a new position in ServiceNow in the 2nd quarter worth approximately $2,881,000. Vestor Capital LLC grew its position in ServiceNow by 38,987.2% during the 1st quarter. Vestor Capital LLC now owns 122,343 shares of the information technology services provider’s stock worth $12,791,000 after purchasing an additional 122,030 shares in the last quarter. Finally, Cardano Risk Management B.V. grew its position in ServiceNow by 6.9% during the 2nd quarter. Cardano Risk Management B.V. now owns 484,785 shares of the information technology services provider’s stock worth $48,129,000 after purchasing an additional 31,119 shares in the last quarter. 87.18% of the stock is owned by hedge funds and other institutional investors.
Insider Transactions at ServiceNow
In related news, insider Paul Fipps sold 2,034 shares of the business’s stock in a transaction that occurred on Monday, August 31st. The stock was sold at an average price of $147.87, for a total value of $300,767.58. Following the completion of 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 transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, Director Paul Chamberlain sold 2,700 shares of the company’s stock in a transaction that occurred on Thursday, August 27th. The stock was sold at an average price of $135.50, for a total value of $365,850.00. Following the sale, the director directly owned 43,990 shares of the company’s stock, valued at $5,960,645. The trade was a 5.78% decrease in their position. The SEC filing for this sale provides additional information. In the last quarter, insiders sold 14,081 shares of company stock worth $1,937,904. 0.34% of the stock is owned by corporate insiders.
More ServiceNow News
Here are the key news stories impacting ServiceNow this week:
Positive Sentiment: Analyst support and upcoming earnings: BMO Capital Markets named ServiceNow a new Top Pick, while Bernstein raised its price target to $266 and Piper Sandler and TD Cowen also lifted targets. Investors are looking for evidence of continued customer upgrades and AI-driven growth in the third-quarter report expected October 28. These 2 software stocks are new Top Picks at BMO
Positive Sentiment: AI monetization remains the central catalyst: ServiceNow is expanding zero-code AI-agent tools, governance capabilities and workflow automation across IT, human resources, customer service and other enterprise functions. Its recent quarter showed approximately 24% year-over-year revenue growth, supporting the argument that the company can convert AI demand into higher-margin software sales. ServiceNow Orchestrates AI’s Next Act—Can Earnings Deliver?
Positive Sentiment: Technical momentum is improving: A bullish flag breakout and stronger moving-average structure could support a move through $154, with one forecast identifying a potential path toward $211 if resistance is cleared. ServiceNow Price Forecast: $154 Breakout Could Extend Recovery
Positive Sentiment: ServiceNow expanded a partnership with Simplify Alpha to develop AI-powered, payer-specific solutions for health insurers, potentially opening another vertical for workflow and automation growth. Simplify Alpha Expands Partnership with ServiceNow
Neutral Sentiment: ServiceNow was highlighted as a favored name in CNBC’s “Final Trades,” adding visibility among retail and professional investors. CNBC’s Final Trades
Negative Sentiment: Risks include a premium valuation near 93 times trailing earnings, increased short interest, a current ratio below 1.0 and another round of San Diego sales-job cuts. These factors could limit upside if upcoming results fail to justify elevated expectations. ServiceNow cuts San Diego sales jobs
ServiceNow Trading Up 3.0%
ServiceNow stock opened at $149.70 on Wednesday. The company has a debt-to-equity ratio of 0.43, a current ratio of 0.70 and a quick ratio of 0.70. The company has a market capitalization of $154.79 billion, a price-to-earnings ratio of 93.56, a PEG ratio of 2.67 and a beta of 0.99. ServiceNow, Inc. has a one year low of $81.24 and a one year high of $192.97. The company’s fifty day moving average price is $136.01 and its two-hundred day moving average price is $114.34.
ServiceNow (NYSE:NOW – Get Free Report) last announced its quarterly earnings results on Wednesday, July 22nd. The information technology services provider reported $0.90 earnings per share for the quarter, topping analysts’ consensus estimates of $0.86 by $0.04. ServiceNow had a return on equity of 16.45% and a net margin of 11.34%. The company had revenue of $3.99 billion during the quarter, compared to analysts’ expectations of $3.93 billion. During the same quarter in the previous year, the firm earned $0.81 earnings per share. The business’s quarterly revenue was up 24.0% compared to the same quarter last year. On average, analysts forecast that ServiceNow, Inc. will post 2.22 earnings per share for the current fiscal year.
Analyst Ratings Changes
NOW has been the topic of several recent analyst reports. BMO Capital Markets boosted their target price on shares of ServiceNow from $115.00 to $118.00 and gave the company an “outperform” rating in a research note on Thursday, July 23rd. Yorkville Ives initiated coverage on ServiceNow in a research report on Monday, October 5th. They issued an “outperform” rating and a $160.00 target price for the company. The Goldman Sachs Group reiterated a “buy” rating on shares of ServiceNow in a report on Monday, August 3rd. Morgan Stanley set a $180.00 price target on ServiceNow in a report on Tuesday, July 21st. Finally, CLSA initiated coverage on ServiceNow in a research report on Monday, July 20th. They set an “underperform” rating and a $72.00 price target on the stock. One research analyst has rated the stock with a Strong Buy rating, thirty-six have issued a Buy rating, four have issued a Hold rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat, the stock has a consensus rating of “Moderate Buy” and an average target price of $152.71.
Check Out Our Latest Stock Analysis on ServiceNow
ServiceNow Profile
(Free Report)
ServiceNow, Inc provides cloud-based software designed to help organizations digitize, automate and manage enterprise workflows. Its Now Platform connects people, processes and systems across departments, enabling customers to manage work through a centralized technology environment.
The company’s products and services address a range of business needs, including information technology service management, IT operations management, customer service management, human resources service delivery, security operations, risk and compliance, and application development.
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BERLIN--(BUSINESS WIRE)--ServiceNow is bringing governance and security across every layer of AI agent execution as an expansion of its partnership with NVIDIA.
SANTA CLARA, Calif.--(BUSINESS WIRE)--ServiceNow Research Study Warns Security Leaders: Ungoverned Agentic AI Exposure Is Compounding Inside Enterprises.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of NOW either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
This article is for informational purposes only and is not intended as a recommendation. The information presented here is based on publicly available data, and I have no knowledge of your individual financial circumstances. It should not be construed as a recommendation or a solicitation to become a client of DocShah Financial, nor does it establish any advisory relationship between you, the reader, and DocShah Financial. It's important to note that conflicts of interest may exist, and I or my clients may have holdings in the stocks discussed and are subject to change at any time without prior notice. Any decision to invest should be based on your own research and consultation with a qualified financial advisor. Investing involves risks, and past performance is not indicative of future results. DocShah Financial or I may stand to gain from stock purchases, and readers should carefully consider their own risk tolerance and financial situation before making any investment decisions. You are fully responsible for any investment outcome.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
NOW daily chart shows breakout of bullish wedge following pullback to test 50-week moving average support Higher Swing Low Reinforces Bullish Structure Moreover, it occurred following the completion of the most recent pullback and establishment of a higher swing low at $126.75. Strength was indicated following the completion of a 38.2% Fibonacci retracement of the prior advance and a test of support near the 50-week moving average, now near $122.55.
Bullish Flag Breakout Awaits Confirmation Last week’s advance also signaled a breakout of a bullish flag pattern on the daily chart off support at the 50-day moving average. So far, the breakout could use confirmation of strength with a daily close above the high of the pattern at $149.60. Resistance seen in the flag is aligned with the downtrend line, which could be why there has been a hesitation to break above the trendline so far.
Breakout Could Open a Path Toward $211 Nonetheless, a decisive rally above $154.20 would signal a continuation of the bullish recovery and put NOW on track to test resistance near the 61.8% Fibonacci retracement at $179.12, followed by a lower swing high at $211.48 from July 2025. That higher potential target is reinforced by the 78.6% Fibonacci retracement of the prior decline at $205.73.
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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%.
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.
Joint development brings payer domain expertise and AI-powered workflows to claims, appeals and grievances, and provider data management
AURORA, Ill.--(BUSINESS WIRE)--Simplify Alpha™, a Simplify Group™ company, today announced the next phase of its partnership with ServiceNow, the Super Intelligence Control Tower for business reinvention, to develop payer-specific, out-of-the-box solutions for health plans. The collaboration brings together Simplify Alpha’s payer domain expertise and the ServiceNow AI Platform to connect data, decisions, and workflows across payer operations and help transform legacy operational areas like claims exception management, appeals and grievances, provider data management, and several others.
Health plans need solutions that reflect how payer operations actually work, including the handoffs between contracts, configuration, claims, and service.” — Anup Panthaloor, Co-founder, Simplify Alpha™
Share Building on the partnership announced in April 2026, the companies will focus joint development in these areas. The solutions will be distributed through ServiceNow, giving health plans a path to adopt reusable capabilities for recurring operational needs.
The development focus includes coordinating claims exceptions and follow-up, managing appeals and grievances workflows, and improving the consistency of provider information across systems, all with AI capabilities to help make these workflows more intelligent and efficient. These solutions will be designed to help health plans reduce manual handoffs, strengthen operational consistency, and respond more effectively to members and providers with human visibility while still maximizing where technology can offer efficiency.
“Health plans need solutions that reflect how payer operations actually work, including the handoffs between contracts, configuration, claims, and service,” said Anup Panthaloor, Co-founder and Chief Revenue Officer, Simplify Alpha. “Our partnership with ServiceNow combines that domain knowledge with intelligent enterprise workflow capabilities to build reusable solutions around health plans’ existing systems. Together, we’re helping teams resolve operational issues and dedicate more time to members and providers.”
The announcement follows Simplify Connect™ 2026, where Simplify Group presented its Payer AI Platform and prebuilt Payer Ontology. The ontology provides shared business context for payer data, while Xperience1™ supports member and provider engagement. These capabilities inform the partnership’s focus on connecting payer intelligence with enterprise workflows.
“The value of better claims and service operations is felt by both members and providers,” said Milind Shah, Head of Healthcare Payer, ServiceNow. “Health plans need to connect information with timely action so they can respond when people need support. Together with Simplify Alpha™, we’re turning payer insights into coordinated actions across the health plan, so the right resources reach the right members and providers at the right time. That means rethinking legacy operations rather than simply layering technology on top of them. By bringing intelligent workflows into these core areas, this partnership helps health plans question whether those operations have to run the same way they always have and build something better.”
Simplify Alpha brings domain expertise and teams that understand and map existing data, architecture, and integrations across the payer landscape, deploy priority use cases, and help health plans build internal delivery capabilities. This delivery model connects reusable solutions with the expertise needed to put them into operation and adapt them as business needs evolve.
For more information, visit simplifyalpha.com.
About Simplify Alpha™
Simplify Alpha™ is the Solutions-as-a-Service (SolaaS) arm of Simplify Group™, delivering managed outcomes across payer operations through domain expertise, AI-enabled workflows, and embedded delivery teams. It brings together capabilities from Simplify Healthcare® and SimplifyX to help health plans address operational challenges across claims, provider operations, member experience, enrollment and billing, prior authorization, sales, and appeals and grievances. Headquartered in Aurora, Illinois, Simplify Alpha focuses on connecting technology with accountable delivery. Learn more at simplifyalpha.com.
ServiceNow, the ServiceNow logo, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries.
ServiceNow (NOW -4.44%) aims to become the execution layer connecting AI agents to enterprise data, permissions, and workflows. AI adoption is already generating meaningful contract value, but competition and valuation create a demanding test. The long-term opportunity depends on whether early deployments expand into durable, recurring enterprise spending.
Stock prices used were the market prices of Sept. 28, 2026. The video was published on Oct. 14, 2026.
Rick Orford has positions in ServiceNow. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy. Rick Orford is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link, they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.
ServiceNow (NOW - Free Report) closed at $141.34 in the latest trading session, marking a -4.87% move from the prior day. This change lagged the S&P 500's daily loss of 1.09%. At the same time, the Dow lost 0.34%, and the tech-heavy Nasdaq lost 2.15%.
The maker of software that automates companies' technology operations's stock has climbed by 7.29% in the past month, exceeding the Computer and Technology sector's gain of 1.99% and the S&P 500's gain of 2.44%.
The upcoming earnings release of ServiceNow will be of great interest to investors. The company's earnings report is expected on October 28, 2026. The company is expected to report EPS of $1.02, up 6.25% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $4.09 billion, up 19.96% from the year-ago period.
NOW's full-year Zacks Consensus Estimates are calling for earnings of $4.06 per share and revenue of $16.17 billion. These results would represent year-over-year changes of +15.67% and +21.8%, respectively.
Investors should also take note of any recent adjustments to analyst estimates for ServiceNow. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed an unchanged state. ServiceNow presently features a Zacks Rank of #3 (Hold).
With respect to valuation, ServiceNow is currently being traded at a Forward P/E ratio of 36.58. This expresses a premium compared to the average Forward P/E of 14.61 of its industry.
Also, we should mention that NOW has a PEG ratio of 1.49. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Computers - IT Services industry had an average PEG ratio of 1.32 as trading concluded yesterday.
The Computers - IT Services industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 148, positioning it in the bottom 40% of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
ServiceNow Inc. (NYSE:NOW) is trending Friday after the company introduced on Thursday the third generation of its employee-centric AI harness and major updates to ServiceNow EmployeeWorks, along with an Nvidia-backed AI Passport for governing AI agents.
ServiceNow's AI business just crossed a milestone that most enterprise software companies spend years chasing, yet the stock still sits well below where the numbers say it should trade. Here is what the gap reveals about where shares could go…
Our 24/7 Wall St. price target for ServiceNow (NYSE:NOW | NOW Price Prediction) is $246.50. That means 77.84% upside from the current price of $138.61. Our model rates the stock a buy with high confidence.
Metric Value Current Price $138.61 Price Target from 24/7 Wall St. $246.50 Upside/Downside 77.84% Recommendation BUY Confidence Level 90% ServiceNow is turning its AI roadmap into real contract value. ServiceNow AI passed $1B in annual contract value, agentic deployments grew 9x in 9 months, and management raised full-year subscription guidance to $15.76-$15.78B.
The share price still trails that progress. Our high confidence comes from steady performance: ServiceNow has beaten revenue and EPS estimates in each of the six quarters in our data.
A 24% Revenue Quarter Is Pulling Shares Off the Lows The stock gained 0.93% over the past week and 5.08% over the past month. It is still down 9.09% year to date and 24.62% over the past year. Over the past 52 weeks it has traded between $81.24 and $192.97.
Second-quarter revenue came in at $3.987B, +24% YoY, above the $3.927B estimate. Non-GAAP EPS of $0.90 topped the $0.8564 consensus. Current remaining performance obligations (cRPO, contracted revenue due within 12 months) reached $13.20B, and the renewal rate held at 98%.
Why Bulls See $273 and Beyond AI monetization is accelerating. AI net new ACV grew over 40% quarter over quarter, and million-dollar-plus AI deals tripled. Price uplifts on the ProPlus tier remain above 30%. Level 1 AI agents are closing 80 to 85% of service requests with no human involvement.
Cybersecurity, strengthened by the Armis and Veza acquisitions, is already a billion-dollar-plus business. Bill McDermott, ServiceNow’s chief executive, called this “the foundation for a re-rating of ServiceNow.”
Most analysts on Wall Street agree: 10 analysts rate the stock a strong buy and 35 rate it a buy. In the bull case, the stock reaches $273.09, a 97.02% return.
What Could Derail the AI Growth Story GAAP operating income fell to $162M (-54.75% YoY), and GAAP subscription gross margin slipped to 73.5% from 80%. Some of Q2’s strength came from U.S. Federal revenue pulled forward from Q3. Q3 subscription growth is guided to slow to about 20.5%, and currency changes will cut about $35M from Q3 cRPO.
That said, most of the GAAP pressure comes from amortization of acquired intangibles and stock-based compensation linked to the acquisitions. Non-GAAP subscription gross margin is guided at 81%, and free cash flow rose to $634M, +20.5% YoY. Our bear case of $194.48 still sits above today’s price.
ServiceNow Grows Faster Than Salesforce and Workday Salesforce (NYSE:CRM) is a direct rival now that ServiceNow runs a 2 billion ACV CRM business. Salesforce grew revenue 10.83% last quarter and trades at 26x trailing earnings, while Agentforce ARR climbed over 240%. ServiceNow’s 30x forward multiple is a modest premium for much faster growth, which makes our target look reasonable.
Workday (NASDAQ:WDAY) competes with ServiceNow’s EmployeeWorks for HR workflows. Workday trades at 53x trailing earnings on 12.82% revenue growth, with a 31.1% non-GAAP operating margin. Next to Workday, our target looks conservative.
Company P/E Latest Revenue Growth ServiceNow 30x (forward) 24.0% Salesforce 26x (trailing) 10.83% Workday 53x (trailing) 12.82% AI Monetization Tips the Scale Toward a Buy Rating Our 24/7 Wall St. price target of $246.50 carries a buy rating at 90% confidence. The key factor is AI growing from a pilot program into a source of ACV.
The bull case strengthens if AI ACV remains on track to beat one and a half billion by year-end. The case weakens if Q3 cRPO growth falls short of guidance. Today, the growth figures support the buy rating.
Here is where our model projects ServiceNow would trade if prevailing trends persist.
Year Price Target from 24/7 Wall St. 2026 $246.50 2027 $362.24 2028 $472.65 2029 $589.22 2030 $664.57 These estimates assume ServiceNow continues executing toward its $30B+ subscription revenue target for 2030. Results could land well above or below these levels depending on how fast AI pricing scales and how smoothly Armis is integrated.
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.
SANTA CLARA, Calif.--(BUSINESS WIRE)--ServiceNow today announced a new AI Passport solution and significant advances in AI governance to help ensure AI agents are production-ready.
ServiceNow shares NOW rose 6.2% in trading on Thursday after TD Cowen raised its price target on the enterprise software company to $165 from $140 and reiterated its Buy rating.
Analyst Derrick Wood expects a strong third-quarter performance, supported by customer upgrades, growth in security products and demand from US federal agencies.
The gains came as investors rotated into enterprise software stocks amid a broader sell-off in semiconductor shares and concerns about heavily indebted artificial intelligence companies.
The shift lifted several software names, with Salesforce gaining almost 4%, Adobe rising more than 3% and Oracle climbing 2.8%.
The iShares Expanded Tech-Software Sector ETF (IGV) added about 1.05%, while the VanEck Semiconductor ETF (SMH) fell 2.11%, heading for its eighth consecutive losing session.
The sector's relative strength came as fresh inflation data reinforced concerns that prices and borrowing costs could remain elevated for longer.
US producer prices rose 1.3% in September from the previous month, more than double economists' forecast of 0.5%, according to the Bureau of Labor Statistics.
Annual producer price inflation reached 6.3%, against expectations of 5.3%, marking the largest increase since December 2022.
Core producer prices, which exclude food and energy, increased 0.7% month over month and 5% year over year.
The consumer price index released on Wednesday also came in hotter than expected, with headline inflation reaching 3.7%, compared with forecasts of 3.6%.
Against this backdrop, investors appeared to favour established enterprise software businesses as concerns about debt exposure weighed on AI-related companies.
ServiceNow offers exposure to enterprise AI through its software products, while TD Cowen's analysis points to its comparatively modest debt burden.
Wood's channel checks indicate that customers are upgrading to ServiceNow's IT service management (ITSM) Prime tier and purchasing more of its other core products.
He also expects the company's Armis security business and US federal operations to outperform expectations.
TD Cowen sees scope for a modest acceleration in growth in current remaining performance obligations (cRPO), which measure contracted revenue expected to be recognised over the next 12 months.
According to Wood, one partner reported that around half of renewal discussions now result in AI upgrades, typically to Prime.
These upgrades can increase average selling prices by roughly 30%, providing another potential source of revenue growth.
ServiceNow is scheduled to report its third-quarter results on October 28.
The earnings release will offer investors an opportunity to assess whether the anticipated improvement in cRPO growth is materialising.
Wood also sees the company's stronger security positioning and growth in AI-related contracts as potential supports for further valuation gains.
Valuation and debt remain in focusServiceNow shares have gained more than 55% since the company reported its second-quarter results.
TD Cowen's revised $165 price target is based on approximately 24 times enterprise value to projected 2027 free cash flow, compared with around 20 times at current prices.
The analysis also places the stock's valuation at roughly 40% below its five-year average of about 40 times next-twelve-month free cash flow.
The firm estimates ServiceNow's net debt at approximately $3.8 billion, against a market value of $144.7 billion.
Its annual contract value tied to AI has also surpassed $1 billion, according to TD Cowen.
However, the analyst's identified risks include ServiceNow's dependence on IT service management and its reliance on large, multimillion-dollar deals.
ServiceNow (NOW +5.31%) and Palantir Technologies (PLTR -0.80%) represent the vanguard of the modern software era. Choosing between these enterprise giants requires a close look at their growth trajectories and current valuations.
ServiceNow focuses on streamlining business operations through its automated workflow platform, connecting departments like HR and IT. Palantir builds data integration systems that help organizations make critical decisions using artificial intelligence. Both companies are essential players in the shift toward data-driven business models as they scale globally.
The case for ServiceNowServiceNow provides an AI platform connecting workflows across IT, HR, and customer service for roughly 8,700 enterprise customers. Strategic partners include Nvidia (NVDA -1.76%) and Microsoft (MSFT +1.01%), as well as system integrators like Accenture (ACN +4.61%) and Infosys (INFY +5.53%). The company also recently completed the acquisition of Armis to enhance its cyber-asset visibility and AI-powered analytics capabilities.
In FY 2025, revenue reached nearly $13.3 billion, representing a growth of roughly 20.9% compared to the prior year. Net income for the period was close to $1.7 billion, which yields a net margin of approximately 13.2%. This performance reflects a steady expansion from its FY 2024 revenue of approximately $11.0 billion.
As of its December 2025 balance sheet, the debt-to-equity ratio was nearly 0.2x. This ratio compares total debt to shareholder equity to measure financial leverage, while the current ratio reached roughly 1.0x. Note that stock-based compensation represented roughly 35.9% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.
Palantir builds software platforms like Foundry and Gotham for AI-driven decision-making in government and tech stocks commercial contexts. The company maintains strategic alliances with partners such as Ondas (ONDS +1.49%) through a joint venture called Regna AI. According to its latest annual report, filed for the period ending December 31, 2025, the U.S. Army remains a significant partner for defense intelligence programs.
In FY 2025, revenue reached nearly $4.5 billion, representing a growth of roughly 56.2% compared to the prior year. Net income for the period was close to $1.6 billion, yielding a net margin of approximately 36.3%. This is a notable increase from the net margin of roughly 16.1% reported in FY 2024.
As of its December 2025 balance sheet, the debt-to-equity ratio was 0.0x. The current ratio reached approximately 7.1x, which measures a company's ability to cover its short-term obligations with current assets. Note that stock-based compensation represented roughly 32% of operating cash flow, meaning reported cash generation is inflated because this non-cash expense is added back in the cash flow statement.
Risk profile comparisonServiceNow faces intense competition from Oracle (ORCL +2.32%), SAP (SAP +2.11%), Salesforce (CRM +3.56%), and Workday (WDAY +4.58%). It must navigate long sales cycles for large enterprise contracts and complex data privacy regulations like the EU AI Act. Risks also exist regarding the integration of various strategic acquisitions and the competition for specialized AI engineering talent.
Palantir relies on third-party cloud infrastructure from Amazon (AMZN -0.26%) and Microsoft. The company also faces risk from revenue concentration among its largest customers and the legal complexities of sensitive defense projects. Ongoing litigation and evolving international AI regulations could also impact its future operations and market reputation.
Valuation comparisonPalantir carries a significantly higher valuation than ServiceNow across both earnings and sales metrics, reflecting the market's high growth expectations for its AI platforms.
MetricServiceNowPalantir TechnologiesForward P/E34.9x129.5xP/S ratio10.0x77.2xValuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?I'd go with Palantir, though this is a matchup between two companies that are both doing things right. ServiceNow delivered another strong quarter in Q2 2026, with subscription revenue growing at a double-digit rate, free cash flow expanding, and AI-powered workflow tools finding traction across enterprise customers. It is one of the most dependable compounders in enterprise software, and the dividend keeps the income investors happy alongside the growth investors.
That said, Palantir's Q2 2026 was a blockbuster by almost any measure. U.S. commercial revenue grew nearly 150% year over year, earnings beat estimates by a wide margin, and management raised full-year guidance substantially. The AIP platform is converting enterprise AI interest into signed contracts at a pace that keeps outrunning Wall Street's models.
Both stocks carry premium valuations, but Palantir is growing faster. For investors with a long time horizon, owning the business at the center of today's enterprise AI adoption could likely be worth paying up for.
Sara Appino has positions in Amazon, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Accenture Plc, Amazon, Microsoft, Nvidia, Ondas, Oracle, Palantir Technologies, Salesforce, ServiceNow, and Workday. The Motley Fool recommends SAP and recommends the following options: long January 2028 $260 calls on Accenture Plc and short January 2028 $280 calls on Accenture Plc. The Motley Fool has a disclosure policy.
Choosing between high-growth software leaders often involves balancing rapid expansion against proven profitability. We compare the collaborative design innovator Figma (FIG +5.35%) and the enterprise workflow powerhouse ServiceNow (NOW +5.31%) to see which is a better buy.
Figma provides a collaborative canvas where teams build digital products together, while ServiceNow offers a platform that automates work across IT, HR, and customer service departments. Both companies are currently integrating artificial intelligence to help their enterprise customers work more efficiently, though they occupy very different stages of financial maturity.
Figma sells a cloud-based design platform that connects design, code, and AI in a single collaborative space. The company serves a diverse user base of designers and developers, utilizing a self-service model alongside enterprisewide sales for large organizations. To drive further growth, the company introduced new pricing and billing structures in 2025 and launched AI credits in March 2026. While Figma has historically grown through word-of-mouth, it is now focusing heavily on enterprise procurement processes to capture larger clients within the tech stocks category.
In its 2025 fiscal year (FY), revenue reached $1.1 billion, representing a significant revenue growth of 41% compared to the previous year. Despite this top-line expansion, the company reported a net loss of approximately $1.3 billion for the same period. This reflects a net margin of negative 118.4%, which shows that expenses currently far exceed the revenue generated. This trend of widening losses suggests a company still prioritizing aggressive market capture and product development over immediate bottom-line results.
Figma maintains a healthy balance sheet with a debt-to-equity ratio of 0.1x as of December 2025. This ratio, which compares total debt to the equity owned by shareholders, suggests a very low reliance on borrowed money. The current ratio, which measures the ability to cover debts due within one year, is strong at 2.6x. The company generated free cash flow of $246.2 million in FY 2025. However, note that stock-based compensation represented 544.2% of operating cash flow, meaning reported cash generation is heavily inflated by this non-cash add-back.
The case for ServiceNowServiceNow provides an AI-powered platform designed to connect workflows and data across massive organizations. The company serves thousands of enterprise customers, including hundreds of clients that spend more than $5 million annually. It reaches these customers through a robust partner ecosystem that includes global integrators like Accenture (ACN +4.61%) and strategic technology partners such as Microsoft (MSFT +1.01%) and NVIDIA (NVDA -1.79%). Recent acquisitions, including the 2026 purchases of Pyramid Analytics and Armis, aim to expand its capabilities in analytics and security asset visibility.
In FY 2025, revenue reached $13.3 billion, a year-over-year revenue growth of 20.9%. Unlike many high-growth software companies, ServiceNow is consistently profitable, reporting net income of $1.7 billion during that same fiscal period. This resulted in a net margin of 13.2%, which is consistent with its performance in recent years. The company has successfully scaled its operations while maintaining a double-digit percentage of revenue as bottom-line profit.
As of its December 2025 balance sheet, the company carries a debt-to-equity ratio of approximately 0.2x. This indicates a conservative capital structure where debt is low relative to shareholder equity. The current ratio stands at 1.0x, suggesting the company has just enough short-term assets to cover its immediate liabilities. ServiceNow generated impressive free cash flow of $4.6 billion in FY 2025. Note that stock-based compensation represented 35.9% of operating cash flow.
Risk profile comparisonFigma faces intense competitive threats from established giants like Adobe (ADBE +3.85%) and newer AI-driven design tools. The company also deals with risks related to rapid AI evolution, including a reliance on third-party models and the potential for inaccurate or biased generated content. Operational security is another concern, as complex AI workflows can be vulnerable to data leakage. Additionally, Figma is navigating an ongoing inquiry by the Office of Foreign Assets Control regarding potential past sanctions violations, which adds a layer of regulatory uncertainty to its business.
ServiceNow operates in a rapidly evolving market where it must compete with AI-native vendors and traditional enterprise software providers like Salesforce (CRM +3.56%), Oracle (ORCL +2.33%), and SAP (SAP +2.06%). The company faces potential pricing pressure and implementation delays due to the increasing complexity of large enterprise deals. Regulatory risks are also present, as the company is currently cooperating with a Department of Justice investigation regarding certain government contracting matters. Furthermore, integrating major acquisitions like Armis carries the risk of operational disruption if the transition is not seamless.
Valuation comparisonServiceNow appears to be the more conservatively valued option based on future earnings estimates, while Figma carries a higher premium reflecting its faster revenue growth rate.
MetricFigmaServiceNowForward P/E78.7x36.3xP/S ratio9.2x10.4xValuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.
The P/S ratio measures market value against sales over the past twelve months. The Forward P/E compares the current stock price to future earnings estimates over the next year.
Which stock would I buy in 2026?Weighing an investment in Figma or ServiceNow is a choice between a high-growth, newly public design disruptor and a massive, highly profitable enterprise workflow titan. Figma could deliver outsized share price returns, since it is the newer software player. ServiceNow is the more conservative bet, but its profitable business offers stability.
Between the two, I would pick ServiceNow. That said, I like Figma's growth rate. In the second quarter, sales hit $370.1 million, a record high and an outstanding 48% year-over-year increase. This was the first full quarter of AI credit monetization, suggesting its AI offerings are gaining traction with customers and producing a new revenue stream.
However, that AI-driven sales growth came with an enormous cost increase. Figma's Q2 bottom line swung from net income of $28.2 million in 2025 to a net loss of $112.2 million in 2026. This injects uncertainty around the company's ability to drive toward profitable sales growth.
Meanwhile, ServiceNow continues to deliver excellent results. The company's second-quarter revenue of $4 billion represented a 24% year-over-year increase. Moreover, its AI agentic deployments rose ninefold in nine months, demonstrating that customers are embracing the new AI functionality while ServiceNow remained profitable with Q2 net income of $298 million.
Robert Izquierdo has positions in Accenture Plc, Adobe, Figma, Microsoft, Nvidia, Oracle, Salesforce, and ServiceNow. The Motley Fool has positions in and recommends Accenture Plc, Adobe, Figma, Microsoft, Nvidia, Oracle, Salesforce, and ServiceNow. The Motley Fool recommends SAP and recommends the following options: long January 2028 $260 calls on Accenture Plc, long January 2028 $330 calls on Adobe, short January 2028 $280 calls on Accenture Plc, and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.
ServiceNow Inc. (NYSE:NOW) shares are climbing Thursday as money flows from debt-laden AI names into enterprise software. Here’s what you should know.
ServiceNow stock is among today’s top performers. What’s behind NOW gains? ServiceNow Rises as Investors Rotate Into SoftwareInvestors are leaving AI-exposed companies that carry heavy debt and buying enterprise software, a move that is lifting legacy tech services stocks. Concern that prices and borrowing costs could stay high for a long time may be making the sector’s tested business models look more appealing.
Thursday’s inflation data fed that worry. In September, producer prices climbed 1.3% from August, more than double the 0.5% economists had projected, the Bureau of Labor Statistics said. Compared with a year earlier, the increase was 6.3%, versus an expected 5.3%, and it is the biggest annual gain since December 2022. Core producer prices, excluding food and energy, rose 0.7% month over month and 5% year over year.
Wednesday’s consumer price index had already come in hot. Headline inflation reached 3.7%, a tenth above the 3.6% forecast.
TD Cowen Raises ServiceNow Price TargetAdditionally, TD Cowen analyst Derrick Wood reiterated a Buy rating on ServiceNow and raised the price target to $165 from $140 in a Wednesday note.
Wood anticipates a strong third quarter, with results due October 28. Checks show customers upgrading to the ITSM Prime tier and buying more of ServiceNow’s other core products. Wood also expects Armis and U.S. federal business to beat expectations and sees room for current remaining performance obligations (cRPO) growth to quicken modestly. One partner said about half of renewal discussions now produce AI upgrades, typically Prime, which raises average selling prices roughly 30%.
ServiceNow stock has jumped more than 45% since its second-quarter report. Wood bases the $165 target on about 24 times enterprise value to 2027 free cash flow, compared with about 20 times at current prices. TD Cowen’s risk list includes dependence on IT service management and on large multimillion-dollar deals.
Why the Shift Could Help ServiceNowThe broader shift could favor ServiceNow, which looks like what investors are hunting for. TD Cowen’s key data list net debt near $3.8 billion against a market value of $144.7 billion, a modest burden compared with debt-heavy AI names. At about 24 times enterprise value to next-twelve-month free cash flow, the stock sits roughly 40% under its five-year average of around 40 times.
ServiceNow also offers AI exposure without much borrowing. TD Cowen said annual contract value tied to AI has surpassed $1 billion. If inflation and rates stay high, companies that steadily produce cash could draw buyers, which may help ServiceNow.
NOW Shares Are ClimbingNOW Price Action: ServiceNow shares were up 4.84% at $146.75 at the time of publication on Thursday, according to Benzinga Pro.
A flat denial from ServiceNow's president sent the stock surging, but the real question is whether shutting down acquisition rumors actually strengthens the company's position in a market crowded with AI rivals building the exact tools it claims not to…
A flat denial of takeover talk is lifting one of the biggest names in enterprise software. ServiceNow (NYSE:NOW | NOW Price Prediction) stock is up 5% to $146.93 in midday trading after the company rejected reports that it planned to buy Decagon, a privately held maker of artificial intelligence (AI) customer-service agents.
Meanwhile, Salesforce (NYSE:CRM) stock is up 4% to $245.39, a gain just shy of the advance in ServiceNow stock. Palantir Technologies (NASDAQ:PLTR) stock is down 0.9% to $199.07, moving opposite both of those software gainers. That split points to selective buying inside the enterprise software group.
Decagon Denial Sparks a Software Rally
ServiceNow moved to shut down the speculation on October 14. Amit Zavery, the company’s president, chief product officer and chief operating officer, stated, “We are aware of misinformation in the market today about our acquisition strategy. To be clear, ServiceNow has no interest or intention of purchasing Decagon.” Zavery added that the approach to acquisitions is unchanged and that ServiceNow prioritizes organic growth.
Management also sees no major strategic gaps requiring large-scale deals at this time, according to Zavery. Because ServiceNow sells workflow software on recurring subscriptions, the denial of a big acquisition signals where ServiceNow’s margins and product roadmap could be heading, and organic growth tends to keep spending tied to products ServiceNow controls end to end.
Home-grown agent tools already sit inside the ServiceNow lineup, including AI Control Tower for governing enterprise agents, Now Assist and Build Agent. That catalog gives ServiceNow an internal path into customer-service automation, the niche where Decagon competes.
Software Outpaces Large-Cap Tech
Sector funds are splitting along the same line as ServiceNow stock and Palantir stock. For a sector read, the iShares Expanded Tech-Software Sector ETF (CBOE:IGV) is up 0.9% to $108.65, a far smaller gain than the move in ServiceNow stock. Across large-cap technology, the Invesco QQQ Trust (NASDAQ:QQQ) is down 0.7% to $723.84, sliding in the same direction as Palantir stock.
Holders of both the iShares Expanded Tech-Software Sector ETF and the Invesco QQQ Trust are seeing their portfolios pulled in opposite directions. Because Palantir is a component of the Invesco QQQ Trust, the dip in Palantir stock and the fund’s decline land on the same side of the ledger.
Bull and Bear Cases for ServiceNow
On the bullish side, ServiceNow’s subscription model and its stated focus on organic growth could protect the margins that steady revenue supports, and skipping a large deal keeps management’s attention on shipping its own agent products. Recurring contracts give ServiceNow a predictable base that a big acquisition might have complicated.
However, a denial removes a rumor without adding new revenue for ServiceNow, and headline-driven gains can fade once the news moves on. Startups building AI customer-service agents, Decagon among them, show how crowded the ServiceNow corner of the market is becoming.
Salesforce offers a parallel story. Bulls see its Agentforce platform as proof that organic agent products can win customers, though bears may note today’s gain rests on sympathy rather than company-specific news. Palantir differs from both. Bulls point to its data-analytics strength with government and commercial clients, while bears argue its far higher valuation leaves room for more profit-taking on crowded agentic AI headlines (we profiled seven companies driving the AI expansion beyond the chipmakers in a free report here).
Organic Roadmap Faces Its Next Test
ServiceNow currently faces the question of whether organic product releases carry the roadmap the company says it doesn’t need deals to fill. Zavery’s comments set that bar publicly, which gives each product launch more weight in the debate over ServiceNow stock. Customer adoption of the existing agent lineup may offer the clearest early evidence.
Salesforce and Palantir face tests of their own. Salesforce must show its agent products keep drawing customers once the sympathy rally cools off, while Palantir must defend its premium as rivals crowd the agentic AI field. The takeaway: investors should keep their positions in ServiceNow stock moderate until adoption evidence arrives, and watch for whether gains broaden across the software group.
Contact [email protected] for any questions or corrections.
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.
Salesforce: Experiencing a Gradual Upward Revenue TrendSalesforce (CRM -0.87%) primarily earns revenue by providing cloud-based customer relationship management (CRM) software to enterprise clients worldwide.
During the third calendar quarter of 2026, it finalized the operational integration of technical personnel and software assets from its acquisition of Fin and executed a multiyear title sponsorship agreement with the International Chess Federation extending through 2028, while simultaneously navigating a widespread internal service disruption that temporarily stalled remote login requests across multiple global regions.
ServiceNow: Delivering Consistent Sequential Quarterly Revenue Growth TrendsServiceNow (NOW +0.99%) primarily generates revenue by offering cloud-based software tools that automate internal technology workflows for large organizations.
Between July and October 2026, it broadened its international geographic footprint by officially opening its very first physical corporate office location in Brazil and concurrently finalized a multiyear strategic collaboration agreement with TeamViewer to seamlessly integrate digital remote connectivity capabilities directly into its existing suite of workplace management systems.
Why Revenue Matters for InvestorsRevenue serves as the primary metric for tracking overall paying customer demand. It reveals whether a corporation is successfully attracting customers and growing its overall business volume over time.
Salesforce vs. ServiceNow Revenue over the last 8 quarters.
Quarterly Revenue for Salesforce and ServiceNowCalendar quarterSalesforce RevenueServiceNow RevenueQ3 2024$9.4 billion (quarter ended Oct. 31, 2024)$2.8 billion (quarter ended Sept. 30, 2024)Q4 2024$10.0 billion (quarter ended Jan. 31, 2025)$3.0 billion (quarter ended Dec. 31, 2024)Q1 2025$9.8 billion (quarter ended April 30, 2025)$3.1 billion (quarter ended March 31, 2025)Q2 2025$10.2 billion (quarter ended July 31, 2025)$3.2 billion (quarter ended June 30, 2025)Q3 2025$10.3 billion (quarter ended Oct. 31, 2025)$3.4 billion (quarter ended Sept. 30, 2025)Q4 2025$11.2 billion (quarter ended Jan. 31, 2026)$3.6 billion (quarter ended Dec. 31, 2025)Q1 2026$11.1 billion (quarter ended April 30, 2026)$3.8 billion (quarter ended March 31, 2026)Q2 2026$11.3 billion (quarter ended July 31, 2026)$4.0 billion (quarter ended June 30, 2026)Data source: Financial Modeling Prep. Data as of Oct. 13, 2026.
Foolish TakeThe revenue trends between Salesforce and ServiceNow show both are enjoying consistent year-over-year sales growth. This is in stark contrast to the Saaspocalypse both experienced earlier this year, when Wall Street became concerned these software-as-a-service (SaaS) stocks would be hurt by the rise of artificial intelligence, leading to a sell-off in their shares.
Instead, their revenue trajectories show these SaaS giants continue to maintain their customer base. Now, they are increasingly integrating AI into their respective platforms, further reinforcing the stickiness of their offerings.
ServiceNow's sales trend suggests it is achieving stronger success. Its second-quarter revenue of $4 billion represented excellent 24% year-over-year growth. As the more mature organization, Salesforce's fiscal Q2 sales rose 11% over the prior year.
However, the CRM titan's AI-related offerings, Agentforce and Data 360, saw Q2 annual recurring revenue reach nearly $3.9 billion, an outstanding 210% year-over-year increase. Not to be outdone, ServiceNow's AI agentic deployments rose ninefold in nine months, demonstrating that customers are embracing the new AI functionality.
With the S&P 500 (^GSPC -1.11%) near all-time highs, it may be surprising to learn that more than 25% of the index's stocks are down 40% or more from their highs, as of Oct. 8, 2026. That's a shocking number, but it also gives investors the opportunity to go bargain hunting.
Let's look at four stocks to scoop up today.
Image source: Getty Images.
1. Netflix Netflix (NFLX +0.16%) shares have tumbled as the streaming giant's growth has slowed. However, there is still a lot to like about the stock.
The company tends to be recession-resistant as a cheap form of entertainment, and it is making a big push with advertising, which should become its biggest growth driver in the coming years. It also has the potential to continue adding subscribers, and it has shown pricing power with its ad-free tier.
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Trading at a forward P/E of around 18.5 times 2027 analyst estimates, it's a solid stock to scoop up at current levels.
2. Oracle Oracle (ORCL -8.83%) has become one of the biggest battlegrounds among artificial intelligence (AI) stocks. The company is seeing major growth in its cloud computing infrastructure business, and it has one of the largest backlogs in the space, at $664 billion as of the end of Q2.
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However, this is a company already carrying considerable debt and burning cash. Meanwhile, Oracle has been trying to get creative with its financing, including setting up a separate entity to buy chips and then lease them out. This adds risk, but cloud computing economics are strong and tend to have relatively quick paybacks of two to three years, or even sooner.
Ultimately, Oracle's leverage and beaten-down stock price could give it more upside in the space if the cloud model proves to work, and many great companies are betting it will.
3. ServiceNow ServiceNow (NOW +0.99%) is a stock that has gotten caught up in the software-as-a-service (SaaS) sell-off in 2026 despite being one of the best-positioned software companies for the age of agentic AI. Its platform is one of the most deeply embedded of any software company, with its solution used to run organizations' entire software stacks and its configuration management database (CMDB) linking the underlying relationships between hardware, software, cloud services, and business processes.
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The company has leaned into AI and cybersecurity to drive growth, and it's looking to become an important agentic AI orchestration platform with its AI Control Tower solution. With the proliferation of AI agents from a plethora of vendors, monitoring, managing, and securing them within an organization will become vital, and ServiceNow appears to be the most likely leader in this space. With a forward price-to-sales (P/S) multiple of 7.5 times based on 2027 analyst estimates, the stock is attractively valued given its opportunity.
4. AppLovin Increased competition from rival Unity Software in the gaming ad space and a slight miss on Q2 earnings have weighed on AppLovin (APP -3.71%) shares, but the company is still growing quickly. It now trades at a rock-bottom valuation of just 13 times 2027 analyst earnings estimates. The company grew its revenue by 53% last quarter to $1.9 billion, while its adjusted EPS surged 66% to $3.76. Meanwhile, it drove Q3 revenue up 46%-48%, helped by continued model improvement and moving into the consumer vertical.
The consumer vertical is another huge potential opportunity for the company, and it looks as if AppLovin is starting to make some inroads. Last month, Citigroup analysts said its data showed the fastest growth for AppLovin in this vertical over the past five months, while a recent Jefferies Financial Group survey indicated that advertisers plan to boost their e-commerce advertising with the company in both Q4 and in 2027.
With low expectations and a cheap stock price, AppLovin looks poised for a big rally.
ServiceNow Inc (NYSE:NOW, XETRA:4S0) the enterprise software company, could strengthen its customer service business by acquiring artificial intelligence startup Decagon, although its recent denial of takeover interest casts doubt on a deal.
Jefferies reiterated a 'buy' rating and $140 price target on ServiceNow after reports of preliminary acquisition discussions initially sent its shares down about 3%.
Business Insider reported on October 13 that Decagon had hired a bank to evaluate acquisition interest and held early discussions with several potential buyers, including ServiceNow.
ServiceNow subsequently stated that it had no interest or intention of purchasing Decagon, although the startup is continuing to explore potential acquisition interest from other companies.
Jefferies argued that the reported discussions highlighted a potential strategic opportunity for ServiceNow as it seeks to compete more aggressively in customer relationship management (CRM) and customer service management (CSM), where it already has more than $2 billion in annual contract value.
Decagon develops conversational AI agents that automate customer support across voice, chat and email, allowing businesses to manage customer service workflows in more than 70 languages.
The startup was last valued at $4.5 billion following a $250 million Series D funding round in January and disclosed in August that its annual recurring revenue (ARR), the value of subscription revenue on an annualised basis, had exceeded $100 million.
That valuation implies a multiple of approximately 45 times ARR, a premium to recent software mergers and acquisitions, according to Jefferies.
The broker noted that investors have reacted negatively to ServiceNow’s recent acquisition activity, with shares falling 8% following its Moveworks deal announcement and 12% after the Armis transaction was announced.
Those reactions reflect concerns about the cost of acquisitions exceeding $11 billion in aggregate and the potential distraction from organic growth, which has become a greater focus for investors.
Jefferies nevertheless argued that Decagon’s ready-to-deploy technology could enhance ServiceNow’s CSM offering and create opportunities to sell additional products to its existing enterprise customers.
The reported strategic rationale also reflects growing competition in AI-powered customer service, with Salesforce having pursued a similar approach through its acquisition of customer service AI company Fin.
Any future deal would therefore raise a fundamental question for ServiceNow investors: whether buying established AI capabilities would accelerate its product development sufficiently to justify a potentially multibillion-dollar price rather than building the technology internally.
Key Takeaways CRM holds an edge over NOW, backed by rapid AI growth, rising earnings estimates and a lower valuation.Salesforce's Agentforce ARR surged over 240% YoY to $1.5B, while ServiceNow's AI ACV surpassed $1B in Q2.CRM trades at a much lower forward P/E than NOW, whose margins face pressure from higher AI costs. Salesforce (CRM - Free Report) and ServiceNow (NOW - Free Report) are expanding their businesses with artificial intelligence (AI), automation and autonomous AI agents. Salesforce is using its strong customer relationship management (CRM - Free Report) business to build a broader AI-powered enterprise platform, while ServiceNow is embedding AI into business workflows and IT service management.
Both companies have attractive long-term growth opportunities as businesses invest in AI. However, differences in revenue growth, AI adoption, earnings estimates and stock valuations make Salesforce the more appealing choice at present.
The Case for Salesforce StockSalesforce has long been a leader in CRM software, but it is now looking beyond traditional customer management to drive its next growth phase. The company is building an integrated platform that combines customer data, collaboration tools, enterprise applications and AI-powered automation.
Its acquisitions support this strategy. Slack has strengthened its collaboration capabilities, while Informatica has expanded its data management offerings. Acquisitions such as Doti AI and Spindle AI further support Salesforce's AI ambitions.
The biggest opportunity lies in converting its large customer base into a growing market for AI products. Early results are encouraging. In the second quarter of fiscal 2027, Agentforce annual recurring revenues (ARR) exceeded $1.5 billion, rising more than 240% year over year. Combined AI and Data ARR, including Agentforce, Data 360 and Informatica Cloud, surged 210% to $3.9 billion.
These figures show that Salesforce's AI business is gaining traction. However, the company still needs to translate this momentum into faster overall revenue growth. Second-quarter fiscal 2027 revenues rose 11% to $11.3 billion. Although this is solid growth for a company of its size, the gap between AI growth and total revenue growth remains significant.
Non-GAAP earnings per share (EPS) jumped 102.7% to $5.90, but the increase was partly influenced by gains on strategic investments, including Salesforce's investment in Anthropic. Investors should not interpret the entire EPS increase as evidence of stronger underlying operations.
The Case for ServiceNow StockServiceNow is also making progress in AI-powered automation. Its products help businesses automate IT support, manage incidents and streamline workflows across departments. In the second quarter of 2026, AI annual contract value (ACV) exceeded $1 billion, surpassing management's expectations. AI net new ACV growth also accelerated by more than 40% sequentially. ServiceNow is progressing toward its goal of generating 30% of ACV from AI by 2030.
Customer adoption is another positive sign. The number of customers using Agentic AI in production increased ninefold over the past nine months. Deal volume among first-time Agentic AI buyers also grew more than 45% year over year in the second quarter. This suggests that ServiceNow is attracting new AI customers while encouraging existing clients to expand their use of its products.
Its AI-native offerings are also creating opportunities to increase revenue per customer. Customers upgrading to these products are generating pricing increases of 20-30%, in line with the company's target. As businesses adopt AI for incident management, case handling and other complex workflows, ServiceNow could benefit from greater customer spending and additional cross-selling opportunities. The company’s second-quarter revenues soared 24% year over year to $3.99 billion, and earnings increased 11.1% to 90 cents per share.
However, rapid AI adoption comes with costs. ServiceNow's non-GAAP total gross margin declined to 78% in the second quarter of 2026 from 81% a year earlier. Higher AI infrastructure expenses and greater reliance on cloud service providers could continue to pressure margins in the near term.
Acquisitions also introduce additional financial and execution risks. ServiceNow acquired Armis for approximately $7.6 billion and Veza for roughly $1.2 billion, expanding its security offerings. The company issued $4 billion in senior notes to help finance Armis, while commercial paper outstanding totaled $2.1 billion as of June 30, 2026. These transactions expand its growth opportunities but increase financing obligations, integration challenges and balance sheet complexity.
NOW vs. CRM: Earnings Estimate TrendsAnalysts’ earnings estimates favor Salesforce. The Zacks Consensus Estimate for ServiceNow's 2026 and 2027 EPS stands at $4.06 and $4.98, respectively. Both estimates have remained unchanged over the past 60 days.
In comparison, the Zacks Consensus Estimate for Salesforce's fiscal 2027 and 2028 EPS is pegged at $16.71 and $15.88, respectively. These estimates have increased 18% and 2.8%, respectively, over the past 60 days.
Upward earnings revisions generally indicate improving analyst expectations. Salesforce's positive revision trend suggests that analysts see better earnings prospects, giving the company an advantage on this measure.
NOW vs. CRM: Stock Performance and ValuationBoth stocks have struggled in 2026. Year to date, ServiceNow shares have declined 9.6%, while Salesforce shares have fallen 10%. Salesforce's larger decline indicates weaker recent share price performance, although it also contributes to its more attractive valuation.
Image Source: Zacks Investment Research
Salesforce currently trades at a forward 12-month price-to-earnings (P/E) multiple of 14.76 compared with ServiceNow's 28.99. This means investors pay considerably less for each dollar of Salesforce's expected earnings.
Image Source: Zacks Investment Research
ServiceNow's premium valuation reflects its AI opportunity and strong demand for workflow automation. Nevertheless, its lower gross margin and acquisition-related risks make that premium harder to justify without sustained earnings growth. Salesforce's lower valuation offers a more favorable entry point, provided it can convert its expanding AI business into stronger company-wide growth.
Conclusion: Salesforce Has the Edge Over ServiceNowBoth Salesforce and ServiceNow are well positioned to benefit from rising enterprise AI adoption. ServiceNow has demonstrated strong demand for its Agentic AI products, and its workflow automation platform offers significant opportunities for customer expansion. However, higher infrastructure costs, declining gross margins and acquisition-related financial commitments remain important risks.
Salesforce, meanwhile, is seeing rapid growth in Agentforce and its broader AI and Data business. Its upward earnings estimate revisions also suggest improving analyst confidence. Most importantly, Salesforce trades at a forward P/E of 14.50X, well below ServiceNow's 29.36X, offering investors a more attractive valuation.
Salesforce has the edge over ServiceNow at present, based on its stronger earnings revision trend, expanding AI business and substantially lower valuation.
Currently, Salesforce and ServiceNow both carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stagwell and ServiceNow to launch a three-year innovative joint go-to-market business strategy leveraging each company's unique offerings Stagwell agencies Code and Theory, 72andSunny, Movers+Shakers, Allison Worldwide and more to collaborate for ServiceNow NEW YORK CITY, NY / ACCESS Newswire / October 14, 2026 / Stagwell (NASDAQ:STGW), the challenger network built to transform marketing, today announced a three-year collaboration with ServiceNow (NYSE: NOW), the Super Intelligence Control Tower for business reinvention, to modernize how enterprises build, activate, and measure marketing campaigns. The collaboration has two key components: 1.
ServiceNow remains a Strong Buy as its thesis holds, despite a recent valuation rebound driven by external AI lab developments. NOW's launch of Flow, a conversational AI-native service desk, targets both new markets and defends against Salesforce, signaling strategic adaptability. Q3 guidance calls for 20.5% subscription revenue growth, 19.5% cRPO growth, and a 31% non-GAAP operating margin, with FX and federal timing as key variables.
Enterprise software provider ServiceNow Inc. (NOW, Financials) may be entering a more robust phase of its growth cycle. That's the assessment from BNP Paribas, which sees several portions of the company strengthening at the same time.
Analyst Stefan Slowinski said that ServiceNow's improved outlook for fiscal 2026 indicates that organic subscription growth may remain near 19% through the end of the year. But the most fascinating aspect of the narrative is what may happen next…
BNP anticipates revenue connected to AI to account for around 9% of annual recurring revenue by year-end. Its security sector might generate 10% of sales by 2027, and increasing government demand and new Assist products could add another layer of growth.
The company is now anticipating subscription revenue growth in fiscal 2027 around 120 basis points above expectations.
That's important because ServiceNow doesn't require a spectacular acceleration to alter how investors value the stock. If AI and security continue to get momentum then a minor pick-up in growth might justify a higher multiple.
There is a danger of execution. The bullish thesis hinges on future items growing fast enough to move the total business.
The next thing to monitor is whether ServiceNow can translate that momentum into visibly quicker subscriber growth as fiscal 2027 approaches.
AI-related stocks traded lower this week. Tech analyst Dan Ives says the memory stock downturn underscores nervousness about the AI buildout and Chinese competition.
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Lisbon , Portugal - 12 November 2025; Jesse Zhang, Co-founder & CEO, Decagon AI on Centre Stage during day two of Web Summit 2025 at the MEO Arena in Lisbon, Portugal. (Photo By Shauna Clinton/Sportsfile for Web Summit via Getty Images) Shauna Clinton/Sportsfile for Web Summit via Getty Images Buzzy AI agent startup Decagon could be the latest company swept up in a growing wave of AI dealmaking.
The company, which was last valued at $4.5 billion earlier this year, has hired a bank to evaluate acquisition interest, according to people familiar with the matter.
Decagon has held early discussions with cloud software giant ServiceNow and additional companies, the people said. If a deal does not materialize, Decagon could instead raise a new funding round.
The interest in Decagon represents a new shift in the AI boom: after years of huge venture rounds and soaring valuations, tech companies are increasingly looking to buy their way into promising AI markets. Hugging Face was recently acquired by Nvidia for 12.9 billion, and OpenRouter was snapped up by Stripe for around $8 billion.
Growing AI-related businesses are often getting offers at a significant premium to their last valuation, so if Decagon were to accept an offer, it could be considerably higher than its previous $4.5 billion value.
Founded in July 2023 by Jesse Zhang and Ashwin Sreenivas, Decagon uses generative AI to automate customer support for enterprise customers, including Delta, Snapchat, and Ticketmaster. The company has raised over $400 million from a roster of well-known Silicon Valley investors, including Andreessen Horowitz, Index Ventures, Bain Capital Ventures, and Accel. It competes with industry veteran Bret Taylor's Sierra, which was valued at $15.8 billion earlier this year.
A deal would also come as ServiceNow looks to reassure investors that it can adapt to AI’s threat to traditional software businesses. Its shares tumbled earlier this year during the so-called SaaS-pocalypse, when investors feared AI could erode software companies’ profit margins.
It was also punished for making a $7 billion acquisition of the security business Armis, a deal announced late last year. The stock has since rebounded as ServiceNow continues to invest heavily in AI and reshape parts of its business.
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Katie is Editor at Large for Business Insider and also a Global Reporter for the Axel Springer Global Reporters Network, working with sister publications including Politico and The Telegraph. She has been a frequent television commentator and on-stage moderator. She is an LA Press Club award winner for her reporting on SpaceX and has broken more than 1,000 stories, which also earned her the TBPN accolade "scoop athlete of the century."
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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.
ServiceNow's AI business just crossed a milestone that has analysts arguing over whether the stock's recent selloff is a gift or a warning sign. The answer depends on one number management has promised to hit before year-end.
ServiceNow (NYSE:NOW | NOW Price Prediction) trades at $139.75. The 24/7 Wall St. price target of $247.40 implies 77.03% upside over the next 12 months, and our model rates the stock a buy.
24/7 Wall St. Price Target Summary Metric Value Current Price $139.75 24/7 Wall St. Price Target $247.40 Upside/Downside 77.03% Recommendation BUY Confidence Level 90% The model has high confidence in this call. It rests on AI. In Q2, annual contract value (ACV) from ServiceNow AI passed $1B, and management said it is “on track to beat our target of one and a half billion ACV by the end of 2026.”
That engine sits on top of subscription revenue growing 24.5% per year. The share price has fell behind those results.
Shares Are Climbing Back After a Brutal Year ServiceNow is up 2.4% over the past week and 5.11% over the past month. It is still down 7.91% year to date and 22.86% over 12 months. It trades about 24% below its 52-week high of $192.97 and well above its low of $81.24.
Q2 revenue rose 24% to $3.987B. Non-GAAP EPS came in at $0.90, ahead of the $0.86 estimate. Current remaining performance obligations (cRPO), which track contracted revenue due over the next 12 months, rose 21% to $13.20B. Management also raised full-year subscription guidance to $15.76-$15.78B.
Why Bulls See $274 Within Reach Agentic AI customer adoption rose 9x over the last nine months, with AI ACV growing over 40% quarter over quarter. ServiceNow’s Level 1 support agents close 80 to 85% of service requests without human help.
The Armis and Veza acquisitions add security and identity products to a cybersecurity business management called “billion-dollar-plus.” The long-term goal is $30B+ subscription revenue by 2030. Analysts are firmly bullish, with 10 Strong Buy and 35 Buy ratings. Our bull case reaches $274.21.
GAAP Profits Are the Risk to Keep an Eye On GAAP operating income fell 54.75% to $162M, and GAAP subscription gross margin slipped to 73.5% from 80%. Part of Q2’s strength came from federal revenue pulled forward from Q3, with guidance pointing to slower growth of +20.5% next quarter.
The pressure comes from amortization and stock-based pay linked to the Moveworks, Veza and Armis deals. Free cash flow still grew 20.53%. The bear case still lands at $195.11.
Is ServiceNow Pricier Than Salesforce, Workday and Palantir? Company Forward P/E Quarterly Revenue Growth YoY ServiceNow 28x 24% Salesforce 14x 10.8% Workday 18x 12.8% Palantir 85x 92.8% Salesforce (NYSE:CRM) competes directly with ServiceNow’s 2 billion ACV CRM business at half the multiple but less than half the growth.
Workday (NASDAQ:WDAY) competes for HR workflow budgets at roughly half ServiceNow’s growth rate.
Palantir (NASDAQ:PLTR) trades at 85x forward earnings as the premium enterprise-AI benchmark. ServiceNow sits between these names: costlier than slower-growing application peers and far less than the AI leader, making our target reasonable.
ServiceNow Price Prediction 2026-2030 The 24/7 Wall St. price target of $247.40 carries a buy rating at 90% confidence. The deciding factor is AI growth coupled with a modest forward multiple.
Conviction would grow if AI ACV tops $1.5 billion by year-end. Caution would rise if cRPO growth slows significantly below guidance. Right now, fundamentals point higher.
Our model projects the stock could trade at these levels if current growth trends and market conditions hold.
Year 24/7 Wall St. Price Target 2026 $144.16 2027 $242.85 2028 $368.90 2029 $478.47 2030 $581.16 ServiceNow’s ability to perform its AI and security strategy supports these projections. Faster AI rollout could add upside. Weaker federal spending or ongoing GAAP margin pressure could pull results lower.
Contact [email protected] for any questions or corrections.
By mid-January, ServiceNow (NOW -0.38%) and Adobe (ADBE -1.70%) were already two of the five worst-performing stocks in the S&P 500 (^GSPC -0.06%) in 2026.
Investors feared that artificial intelligence (AI) agents might handle work that many software companies charge for one user, or "seat," at a time.
ServiceNow trades near $141 as of this writing, about 40% below its record close in January 2025. Adobe, at about $242, is about 65% below the record it hit in November 2021.
But both companies are still growing by double digits. And I think AI fear explains only part of each drop -- in ServiceNow's case, maybe not even the biggest part.
Image source: Image source: The Motley Fool.
1. ServiceNow's slide is mostly about valuationShowing how steady demand has been at the enterprise workflow software company, ServiceNow's subscription revenue has grown more than 20% year over year for three quarters in a row. Growth was 21% in the fourth quarter of 2025, 22% in the first quarter of 2026, and 24.5% in the second quarter.
But the latest number got some help. Management's guidance had built in about 1.25 percentage points of growth from Armis, a cybersecurity firm ServiceNow bought in April, and U.S. federal customers pulled some revenue forward from the third quarter, for which management expects subscription growth of 20.5%.
Profits are keeping pace. ServiceNow's non-GAAP (adjusted) operating margin improved to 31% last year, up from 29.5% in 2024, and management is calling for 31.5% this year. It also expects free cash flow to be about 35% of revenue. And the company spent about $2.2 billion on buybacks in the first quarter, after its board added $5 billion to its repurchase authorization in January.
So why is the stock down so much? I think it's mostly the price investors paid at the top.
At its January 2025 record close, ServiceNow stock cost about 84 times its 2024 adjusted earnings per share. Adjusted earnings per share over the past four quarters are about 35% higher than that 2024 figure. Yet shares today cost about 37 times those adjusted earnings.
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Granted, AI worries added to the slide. But shares were already about 35% down from their peak by the end of 2025, before this year's software sell-off. And the stock's worst day this year, an 18% drop in April, came after the company said conflict in the Middle East had pushed back several big deals.
2. Adobe's results don't show AI damage yetAdobe's decline looks more closely linked to AI. Shares fell more than 21% in 2025 and are down about 31% so far in 2026, as investors feared that AI lowers the barrier to entry in design.
But the creative software company's results haven't shown that damage. Its subscription revenue climbed 14% year over year in the fiscal third quarter of 2026 (the period ended Aug. 28, 2026), the same rate as in the fiscal second quarter. And annualized recurring revenue (ARR) from its AI-first products rose more than 150%. Adobe also produced a third-quarter record of $2.52 billion in operating cash flow, up about 15% year over year, and spent about $2.2 billion on buybacks. Helped by a falling share count, adjusted earnings per share grew 15% to $6.13.
There are signs of a slowdown, of course. Total ARR rose 11.2% in fiscal Q3, and management's full-year target calls for 10.2%. Adobe's adjusted operating margin also dipped to 44% from about 46% a year before.
But at about $242, Adobe stock sells for about 10 times management's fiscal 2026 target for adjusted earnings per share. Investors paying that price seem to expect Adobe's growth to cool fast.
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Time to buy?ServiceNow shares aren't cheap at about 28 times expected 2027 earnings. But for a business growing subscription revenue roughly 20% with slightly rising margins, I think the price is fair.
The number I'd track is current remaining performance obligations, the contract revenue ServiceNow expects to recognize in the next 12 months. That figure rose 21% in the second quarter, and management sees 19.5% growth in the third.
Adobe, at under 9 times its expected fiscal 2027 earnings, asks even less of its business. If its ARR growth keeps falling toward the single digits, that low valuation might end up being fair.
Ultimately, I don't think AI fear explains either discount by itself. At these prices, I think both stocks are worth considering -- and maybe bought bit by bit instead of all at once.
ServiceNow, Inc. (NYSE:NOW – Get Free Report)’s share price gapped up prior to trading on Monday after Royal Bank Of Canada raised their price target on the stock from $130.00 to $176.00. The stock had previously closed at $140.86, but opened at $145.54. Royal Bank Of Canada currently has an outperform rating on the stock. ServiceNow shares last traded at $143.8830, with a volume of 2,828,107 shares.
NOW has been the subject of a number of other reports. CLSA began coverage on ServiceNow in a research note on Monday, July 20th. They set an “underperform” rating and a $72.00 target price for the company. TD Cowen restated a “buy” rating and issued a $140.00 target price on shares of ServiceNow in a research note on Monday, August 17th. BTIG Research reaffirmed a “buy” rating and set a $170.00 price target on shares of ServiceNow in a research report on Monday. Weiss Ratings raised shares of ServiceNow from a “hold (c-)” rating to a “hold (c)” rating in a research note on Thursday. Finally, Needham & Company LLC lifted their price objective on shares of ServiceNow from $115.00 to $155.00 and gave the company a “buy” rating in a report on Friday, September 11th. One analyst has rated the stock with a Strong Buy rating, thirty-five have given a Buy rating, four have assigned a Hold rating and two have given a Sell rating to the company’s stock. According to data from MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and a consensus price target of $147.95.
View Our Latest Analysis on NOW
Insider Activity In related news, insider Paul Fipps sold 2,034 shares of the business’s stock in a transaction 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 transaction, 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 ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, insider Jacqueline P. Canney sold 7,847 shares of the company’s stock in a transaction on Friday, August 28th. The stock was sold at an average price of $138.00, for a total transaction of $1,082,886.00. Following the sale, the insider directly owned 30,042 shares in the company, valued at $4,145,796. This trade represents a 20.71% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders sold 14,081 shares of company stock valued at $1,937,904. 0.34% of the stock is owned by insiders. Institutional Investors Weigh In On ServiceNow Institutional investors and hedge funds have recently modified their holdings of the company. Moody National Bank Trust Division boosted its position in shares of ServiceNow by 3.9% in the third quarter. Moody National Bank Trust Division now owns 13,038 shares of the information technology services provider’s stock valued at $1,747,000 after acquiring an additional 484 shares during the period. Central Pacific Bank Trust Division increased its position in ServiceNow by 7.0% during the third quarter. Central Pacific Bank Trust Division now owns 19,131 shares of the information technology services provider’s stock worth $2,564,000 after acquiring an additional 1,259 shares during the period. Defender Capital LLC. bought a new stake in ServiceNow in the 3rd quarter valued at about $268,000. First Financial Bank Trust Division acquired a new position in shares of ServiceNow during the 3rd quarter worth approximately $5,511,000. Finally, Greenwich Wealth Management LLC grew its position in shares of ServiceNow by 5.2% during the 2nd quarter. Greenwich Wealth Management LLC now owns 5,816 shares of the information technology services provider’s stock worth $577,000 after purchasing an additional 290 shares in the last quarter. 87.18% of the stock is owned by institutional investors.
ServiceNow Price Performance The company’s fifty day moving average price is $132.86 and its 200 day moving average price is $112.36. The company has a market capitalization of $147.98 billion, a P/E ratio of 89.45, a PEG ratio of 2.59 and a beta of 0.99. The company has a quick ratio of 0.70, a current ratio of 0.70 and a debt-to-equity ratio of 0.43.
ServiceNow (NYSE:NOW – Get Free Report) last issued its quarterly earnings results on Wednesday, July 22nd. The information technology services provider reported $0.90 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.86 by $0.04. The business had revenue of $3.99 billion during the quarter, compared to analysts’ expectations of $3.93 billion. ServiceNow had a return on equity of 16.45% and a net margin of 11.34%. The firm’s revenue for the quarter was up 24.0% compared to the same quarter last year. During the same period in the previous year, the company posted $0.81 earnings per share. As a group, sell-side analysts forecast that ServiceNow, Inc. will post 2.22 EPS for the current year.
About ServiceNow (Get Free Report)
ServiceNow, Inc is a cloud-based enterprise software company that helps organizations digitize, automate and manage workflows. Its platform connects people, processes and systems across departments, enabling businesses to replace manual, disconnected activities with standardized digital workflows.
The company’s products and services support a range of functions, including information technology service management, IT operations management, customer service, human resources, risk and security operations, and software development.
See Also Five stocks we like better than ServiceNow Broadcom’s Anthropic Bet Gets Bigger as $60 Billion Financing Raises the Stakes Insider Buying Signals Opportunity in H.B. Fuller, FocalTherics, Cardinal 5 Retail Picks to Watch as the Holiday Shopping Season Nears C.H. Robinson Bets Its AI Story on RXO—But the Market Isn’t Sold Receive News & Ratings for ServiceNow Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for ServiceNow and related companies with MarketBeat.com's FREE daily email newsletter.
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.
Investors evaluating the enterprise software market in 2026 often find themselves choosing between Salesforce (CRM +2.67%) and ServiceNow (NOW +1.06%). Both companies dominate their niches, but they offer very different paths for your capital.
Salesforce remains the global leader in customer relationship management, while ServiceNow focuses on digitizing workflows across the entire enterprise. As organizations increasingly prioritize artificial intelligence and efficiency, these two platforms have become essential infrastructure. This comparison examines their financial health, growth trajectories, and current valuations to help you decide which is a better fit.
The case for SalesforceSalesforce serves as a cornerstone among tech stocks, offering a comprehensive suite of cloud-based tools for sales, service, and marketing. It manages relationships for more than 150,000 organizations, leveraging a massive direct sales force to reach industries ranging from finance to the public sector. No single customer accounts for more than 10% of total revenue, suggesting a well-diversified base not overly dependent on any one entity.
In the fiscal year ended Jan. 31, 2026, revenue reached nearly $41.5 billion, representing approximately 9.6% year-over-year growth. This performance resulted in a net income of roughly $7.5 billion. The company reported a net margin of 18%, a significant improvement over the 16.4% recorded in the prior fiscal year, as it focused on operational efficiency.
As of its January 2026 balance sheet, Salesforce maintains a debt-to-equity ratio of approximately 0.3x, which compares total debt to shareholder equity. The company generated roughly $14.4 billion in free cash flow and has a current ratio of 0.8x, which measures short-term assets against liabilities. Note that stock-based compensation accounted for roughly 23.4% of operating cash flow, inflating reported cash generation, since SBC is a non-cash expense added back to cash flow.
The case for ServiceNowServiceNow focuses on automating complex workflows across IT, HR, and customer service departments through its specialized AI platform. The company serves approximately 8,700 enterprise customers, including more than 600 clients with over $5 million in annual contract value. It maintains critical technology partnerships with industry leaders such as Nvidia (NVDA -1.48%) and Microsoft (MSFT +1.13%) to enhance its platform capabilities and reach.
In the fiscal year ended Dec. 31, 2025, revenue reached nearly $13.3 billion, representing approximately 20.9% year-over-year growth. The company produced a net income of roughly $1.7 billion for the period. Its net margin of 13.2% indicates steady profitability while the business continues to reinvest heavily in its AI-powered workflow automation tools and global sales expansion.
According to its December 2025 balance sheet, ServiceNow carries a debt-to-equity ratio of approximately 0.2x and a current ratio of 1.0x. The company produced roughly $4.6 billion in free cash flow, while its Forward P/E of 33.9x compares the stock price to future earnings estimates. Note that stock-based compensation accounted for roughly 35.9% of operating cash flow, inflating reported cash generation, since SBC is a non-cash expense added back to cash flow.
Risk profile comparisonSalesforce faces intense competition from established enterprise software providers like Oracle (ORCL -2.60%) and SAP (SAP +1.16%). Cybersecurity remains a primary concern, as data breaches could lead to significant reputational harm and legal liability. The company also navigates execution risks associated with integrating recent acquisitions and evolves its strategy to meet complex global regulations on AI and data privacy.
ServiceNow operates in a field defined by rapid technological evolution, where falling behind in AI innovation could erode its market share. The company handles government contracting risks, in which procurement delays or regulatory investigations can affect financial results. Integration of acquisitions such as Moveworks adds operational complexity and requires careful management attention to realize the synergies expected by investors.
Valuation comparisonSalesforce appears more attractive for value-conscious investors, while ServiceNow's higher valuation reflects its superior top-line growth and market expansion. The P/S ratio measures the market value relative to sales over the past twelve months.
MetricSalesforceServiceNowForward P/E13.4x33.9xP/S ratio4.2x9.7xValuation metrics include those sourced from Financial Modeling Prep (FMP) and may differ from those of other data providers.
When comparing Salesforce and ServiceNow, investors should consider a few key factors. Let's have a look at them and see what that tells us about each stock.
Firstly, we should discuss growth. Both companies are growing steadily. However, ServiceNow is clearly growing faster. The company has averaged 23% year-over-year revenue growth over the past five years. Salesforce, meanwhile, has averaged 13%. Granted, ServiceNow is growing off a smaller revenue base of around $14 billion, compared with $43 billion for Salesforce, but for growth-focused investors, ServiceNow remains the clear leader in this category.
A second factor to consider is each company's profitability. It is here that Salesforce has an edge. It has averaged an operating margin of 13.8% over the last five years, while ServiceNow has averaged 9.3% over the same period. What's more, the current gap between the two is even wider. Salesforce reported 21.5% operating margin in its most recent quarter, while ServiceNow's dipped slightly to 13.6%, bringing the difference to 7.9%.
Last, there's valuation. Since both companies have been consistently profitable, the forward price-to-earnings (P/E) multiple is the appropriate valuation metric. And on this front, it's clear that Salesforce has an advantage. Its forward P/E is 13.4x, while ServiceNow's is 33.9x. In short, Salesforce stock is more than twice as cheap on a forward P/E basis.
To conclude, both Salesforce and ServiceNow offer intriguing investment profiles. However, in a head-to-head matchup, Salesforce has distinct advantages in profitability and valuation.
Bank of America just flipped its Salesforce call from Underperform to Buy in a single move, arguing the AI threat that spooked investors was overblown. Whether the upgrade holds up depends on one quarter that could prove or bury the…
Salesforce (NYSE:CRM | CRM Price Prediction) stock is up 3% to $236.83 in morning trading after Bank of America double-upgraded the shares to Buy from Underperform. Bank of America’s reversal lands on Salesforce stock, which is still down 9% year to date even after the jump. The call argues that artificial intelligence (AI) can entrench the platforms large companies already run on.
Meanwhile, ServiceNow (NYSE:NOW) stock is up 3% to $144.39, trailing the gain in Salesforce stock. Notably, Palantir Technologies (NASDAQ:PLTR) stock is down 0.2% to $208.60, lagging both software peers.
The iShares Expanded Tech-Software Sector ETF (CBOE:IGV) is up 0.6%. At the same time, the Invesco QQQ Trust (NASDAQ:QQQ) is down 0.2%. Thus, the software segment and Salesforce stock in particular are drawing buyers even as large-cap technology goes practically nowhere.
Bank of America Drops Its AI Disruption Worry
Bank of America raised its price target on Salesforce stock to $285 alongside the upgrade, and the bank sees an AI pivot driving the shares higher. Its reversal rests on the view that large enterprises are unlikely to replace the platforms housing their business logic, data, workflows and compliance frameworks, which counters an earlier concern that AI would disintermediate enterprise software. Barron’s headline on the call put it bluntly: “The AI Overhang Is Over, Say Analysts.”
Salesforce sells customer relationship management software on recurring subscriptions and has layered agent products on that base, including Agentforce and the Anthropic-powered Claudeforce announced in late August. In the company’s Q2 FY27 results, Agentforce annual recurring revenue (ARR) exceeded $1.5 billion, up over 240% year over year, and current remaining performance obligations reached $33.5 billion. Marc Benioff, chief executive at the time of that release, stated, “We just delivered one of our best quarters ever, outperforming across every key metric.”
Three Platforms Carry Very Different Price Tags
Beyond Salesforce, ServiceNow offers enterprise workflow software and Palantir sells data and decision platforms, so all three companies are paid to sit underneath a customer’s operations. At 14x forward earnings, Salesforce stock trades well below ServiceNow stock at 28x and Palantir stock at 85x.
Growth rates explain much of that valuation spread, since faster expansion typically earns a higher multiple. Palantir’s Q2 2026 revenue rose 92.8% year over year to $1.94 billion, and the company raised its FY2026 sales outlook to $8.15 billion to $8.16 billion. “This quarter was otherworldly,” Alex Karp, Palantir’s chief executive at the time of that report, declared.
ServiceNow’s Q2 FY26 revenue climbed 24% to $3.99 billion, and its AI business crossed $1 billion in annual contract value. Management also raised its FY26 subscription revenue guidance to $15.76 billion to $15.78 billion.
Salesforce’s Q2 FY27 revenue grew 10.8% to $11.35 billion, and management raised its FY27 sales outlook to $46.1 billion to $46.4 billion. However, adoption of Salesforce’s agent products hasn’t yet reached reported revenue at scale, and the quarter’s earnings leaned on $2.61 billion in net gains on strategic investments.
What to Watch Next
The next quarterly report from Salesforce is the clearest test of the upgrade thesis, since it can show whether agent products are moving the top line and whether management’s raised outlook holds up. Anyone following the group can watch for whether the software fund keeps its lead over the large-cap technology fund.
One rating change doesn’t settle a debate that has run on Salesforce stock all year, especially while agent adoption is still catching up to the story. Investors should size their positions so a single analyst call doesn’t dominate their risk.
Contact [email protected] for any questions or corrections.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about ServiceNow (NOW - Free Report) .
ServiceNow currently has an average brokerage recommendation (ABR) of 1.35, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 46 brokerage firms. An ABR of 1.35 approximates between Strong Buy and Buy.
Of the 46 recommendations that derive the current ABR, 38 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 82.6% and 6.5% of all recommendations.
Brokerage Recommendation Trends for NOW
Check price target & stock forecast for ServiceNow here>>>
While the ABR calls for buying ServiceNow, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Is NOW a Good Investment?Looking at the earnings estimate revisions for ServiceNow, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $4.06.
Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for ServiceNow. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for ServiceNow.
