Can ServiceNow’s massive new AI milestone sustain its high-flying valuation against intensifying tech competition?
How Did ServiceNow Earnings Beat Estimates?
In the second quarter of 2026, ServiceNow generated total revenue of $3.99 billion, representing a 24% year-over-year increase. This comfortably surpassed the consensus estimate of $3.93 billion. The primary driver of this growth was the company’s core subscription business, which climbed 24.5% to $3.88 billion. Strong enterprise spending on cloud migration and digital transformation helped fuel this impressive top-line performance. Profitability also exceeded expectations, with an adjusted earnings per share (EPS) of $0.90, beating the analyst consensus of $0.86.
The company’s operating margin reached 29.5%, which was 300 basis points higher than initial guidance. Consequently, management reacted by raising its full-year guidance, projecting subscription revenue between $15.76 billion and $15.78 billion, representing wether-adjusted growth of approximately 21%. The full-year operating margin target was also bumped up to 31.5%.
However, the company did note a minor currency headwind. Management warned that a strengthening US Dollar is expected to create a $35 million negative impact on current remaining performance obligations (cRPO) growth in the third quarter. Despite this minor obstacle, the overall financial health demonstrated in the **ServiceNow Earnings** remains exceptionally strong.
What Is Driving the AI Growth for ServiceNow?
A significant milestone highlighted in the **ServiceNow Earnings** report was the company’s AI segment performance. The annual contract value (ACV) for the company’s artificial intelligence products officially crossed the $1 billion threshold. This milestone reflects the rapid adoption of agent-based AI systems, which have seen massive traction over the past nine months as enterprises look to automate complex workflows.
The company’s cRPO, which represents revenue expected to be recognized over the next 12 months, grew by 21% to $13.20 billion. Furthermore, ServiceNow secured more than 123 deals with a net new ACV exceeding $1 million, marking a 40% year-over-year increase.
To sustain this momentum, the company announced a strategic partnership with TeamViewer. This collaboration aims to accelerate autonomous IT operations by integrating TeamViewer’s remote access solutions directly into the ServiceNow AI platform. This integration forms a key part of the “AI Control Tower” strategy, designed to help enterprises manage complex cloud environments with minimal manual effort. However, competition remains fierce, as legacy giants like Microsoft, Salesforce, and Oracle continue to aggressively expand their own enterprise AI offerings.
How Do Analysts Rate ServiceNow Stock?
Following the earnings release, major Wall Street institutions updated their outlooks on the stock. JP Morgan maintained its Overweight rating and raised its price target to $150 from $145. Bernstein analyst Peter Weed maintained an Outperform rating and raised his price target to $248 from $236, citing strong enterprise spending and expanding margins.
On the other hand, some analysts remain more cautious. UBS analyst Karl Keirstead maintained a Neutral rating and lowered his price target to $110 from $115, pointing to potential subscription growth moderation. Macquarie analyst Steven Koenig maintained a Neutral rating but nudged his price target up to $110 from $109. Currently, the stock trades at $92.23, up 0.32% in late trading, showing signs of stabilization after experiencing broader market headwinds earlier in the week.
Related Coverage
For more insights into the competitive landscape, read our analysis on how ServiceNow Earnings Drop 1.9% as OpenAI Threatens Workflow Market, which explores the long-term impact of generative AI. Additionally, check out how other tech leaders are performing in Intel Earnings Surge +4% as AI CPU Demand Sparks Massive Rally to see how hardware demands are shifting the broader market.
Our business is firing on all cylinders.— Bill McDermott
Ultimately, the latest **ServiceNow Earnings** demonstrate that the company’s operational engine is running at full capacity. For long-term investors, the combination of raised guidance, expanding operating margins, and a rapidly growing AI portfolio presents a compelling growth narrative. As the integration with TeamViewer begins to deliver results, the stock is well-positioned to regain its upward momentum.
