ServiceNow, the cloud-based platform that helps large organizations automate digital workflows across IT operations, human resources, customer service, and security, delivered better-than-expected second-quarter results on both revenue and profit, sending its shares higher in the following trading session.

The enterprise software company reported quarterly revenue of $3.98–$3.99 billion, representing a 24% year-over-year increase and surpassing Wall Street's consensus estimate of $3.93 billion. Adjusted earnings per share reached $0.90, exceeding the expected range of $0.85–$0.86.

Shares of ServiceNow, Inc. (NOW) climbed approximately 5.5% in pre-market trading to around $100.67 before settling to a gain of roughly 2% during the regular session.

CEO Bill McDermott described the results as exceptional, stating they "solidify our position as the fastest-growing major enterprise software and cybersecurity company."

Heading into the report, NOW stock had been down nearly 38% year-to-date amid investor concerns over slower enterprise software spending and potential AI-driven disruption. Thursday's rally provided some relief, though the stock remained well below its prior levels.

AI Annual Contract Value Target Raised

Management increased its 2026 AI annual contract value target by 50% to $1.5 billion, citing stronger-than-anticipated customer adoption. ServiceNow has been embedding generative AI capabilities across its platform under its Now Assist product line, integrating features such as case summarization, virtual agent enhancements, and knowledge management into its core workflows. The upward revision marks a significant acceleration for a segment that has drawn close attention from investors.

On the guidance front, ServiceNow raised its full-year subscription revenue outlook. For the third quarter, management projected subscription revenue of $3.975–$3.98 billion, representing approximately 20.5% year-over-year growth, along with cRPO growth of about 19.5%.

J.P. Morgan analyst Mark Murphy flagged what he called an "odd lull" in organic constant-currency cRPO growth, identifying it as a lingering concern. cRPO, or current remaining performance obligations, represents contracted subscription revenue expected to be recognized over the next 12 months and is closely tracked as a forward indicator of demand. He suggested that cautious sentiment among investors may persist until the company demonstrates a return to previous growth rates. Murphy also noted that the modest guidance increase could raise questions about why stronger AI momentum was not more clearly reflected in the outlook. He expects management to address these issues at the upcoming Financial Analyst Day.

Analyst Ratings and Price Target Revisions

Murphy maintained his Overweight rating on ServiceNow but lowered his price target from $195 to $145, which still implies approximately 49% upside from current levels. He characterized bearish expectations of a below-historical valuation multiple as "overdone to the downside."

Jefferies analyst Samad Samana kept his Buy rating and raised his price target from $135 to $140. Evercore ISI's Kirk Materne maintained an Outperform rating and increased his target from $150 to $160.

Overall, ServiceNow holds a Strong Buy consensus across Wall Street, based on 26 Buy ratings, 2 Hold ratings, and 1 Sell rating. The average price target stands at $140.65, implying roughly 44% upside over the next 12 months.

Murphy pointed to ServiceNow's capacity to help customers "do more with less" as a key differentiator as enterprises tighten software budgets. He drew parallels between the current slowdown and previous temporary lulls that were followed by a return to faster growth.

The company's upcoming Financial Analyst Day is expected to provide further detail on long-term targets and growth strategy.