In the ever-evolving tech landscape, ServiceNow has positioned itself as a key player, harnessing the power of artificial intelligence to drive growth and deliver innovative solutions. The company’s recent financial results and strategic moves highlight its potential as a discounted large-cap growth opportunity for investors.
ServiceNow’s Impressive Performance
ServiceNow (NYSE: NOW) reported a stellar Q4, with revenue surging by 20.5% year-over-year to $3.57 billion, surpassing analyst expectations. Additionally, adjusted EPS climbed 26% to $0.92, outpacing the consensus estimate of $0.88 on revenue of $3.53 billion. The company’s subscription revenue alone grew by 21% to $3.47 billion, with professional services also seeing a 13% increase at $102 million.
Despite these strong results, ServiceNow shares saw a post-earnings selloff, yet Wall Street analysts remain bullish. Bernstein reaffirmed its “Outperform” rating with a price target of $219, viewing the stock as a uniquely positioned “discount large-cap growth” opportunity.
The AI Revolution: Now Assist
At the forefront of ServiceNow’s success is its AI tool, Now Assist, which has achieved $600 million in annual contract value. The company is targeting to exceed $1 billion by 2026, showcasing its commitment to AI-driven innovation. CEO Bill McDermott emphasized AI as an unparalleled opportunity, integrating AI with structured workflows to improve enterprise orchestration.
ServiceNow has also ventured into AI cybersecurity by acquiring Armis and Veza to enhance its offerings. The synergy between security and AI is poised to strengthen its market position further, making its AI Control Tower a top-tier platform for orchestrating agentic AI solutions.
Looking Ahead: Growth Projections
ServiceNow forecasts 21.5% Q1 subscription revenue growth, with full-year estimates ranging between $15.53 billion and $15.57 billion—a growth rate of 20.5% to 21%. Remaining performance obligations (RPO), an indicator of future revenue, saw a robust 26.5% increase to $28.2 billion. These numbers demonstrate strong customer demand and long-term potential.
What Analysts Are Saying
Wall Street analysts are not shying away from their positive stance on ServiceNow. Multiple firms, including Cantor Fitzgerald and Stifel, have retained favorable ratings, citing the stock’s potential for long-term gains. Its valuation at 6x revenue and 16x free cash flow makes it an attractive investment compared to peers in the large-cap software industry.
Invest in Growing AI Technology
Looking to explore the emerging potential of artificial intelligence in enterprise workflows? Start with leading investments in AI-driven companies like ServiceNow. For a hands-on experience with productivity, consider integrating AI tools like the ServiceNow Now Assist.
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