As AI Momentum Grows, Should Investors Buy ServiceNow Stock?

Core Viewpoint - ServiceNow is positioned as a potential leader in the agentic AI space, with strong revenue growth driven by AI adoption, despite a 7% decline in stock price this year [1][15]. Group 1: Financial Performance - ServiceNow reported a revenue increase of 22.5% year over year, reaching $3.22 billion, and adjusted earnings per share (EPS) rose by 30.7% to $4.09, surpassing analyst expectations [8]. - Subscription revenue also grew by 22.5% year over year to $3.11 billion, while professional services revenue increased by 19.5% to $102 million [8]. - The company has raised its full-year subscription revenue guidance to between $12.775 billion and $12.795 billion, reflecting a growth rate of around 20% [12][13]. Group 2: AI Integration and Growth - AI is the primary growth driver for ServiceNow, with the Now Assist generative AI suite exceeding expectations, resulting in 21 deals involving five or more Now Assist products [6]. - The introduction of AI Control Tower, a centralized platform for managing AI agents, is expected to generate a value of $350 million this year [7]. - The number of customers with a net annual contract value (ACV) of $20 million or more increased by over 30%, indicating strong demand for AI-driven solutions [9]. Group 3: Future Outlook - The company forecasts Q3 subscription revenue growth between 20% to 20.5%, with current RPO expected to increase by 18.5% [11]. - Remaining performance obligations (RPO) rose by 29% to $23.9 billion, suggesting a positive outlook for future revenue growth [10]. - ServiceNow's stock is trading at a forward price-to-sales multiple of 13 based on 2026 estimates, which is considered reasonable for a high-margin SaaS business [16].