Did Strong Q2 Results and New AI Tools Just Shift ServiceNow's (NOW) Investment Narrative?

• ServiceNow recently announced strong second quarter 2025 earnings results with revenue of US$3.22 billion and net income of US$385 million, alongside positive subscription revenue guidance for the upcoming quarter and full year, both projecting approximately 20% year-over-year growth.
• The company also introduced agentic workforce management to advance AI-driven automation and formed a partnership with CapZone Impact Investments to drive digital transformation in critical U.S. manufacturing sectors.
• We'll explore how ServiceNow’s rollout of agentic workforce management could influence its investment narrative and future opportunities.

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ServiceNow Investment Narrative Recap

To be a ServiceNow shareholder, you need to believe in the company’s ability to sustain adoption of its AI-powered workflow solutions across enterprises. The latest strong earnings results and robust revenue guidance reinforce confidence in near-term growth, but short-term risks, such as execution in competitive markets and reliance on federal contracts, remain. For now, the positive Q2 performance and upbeat guidance appear to support the main catalyst of accelerating AI-driven growth; no material impact to the risk outlook stands out from these announcements.

The company’s rollout of agentic workforce management is especially relevant to the growth story, as it exemplifies ServiceNow’s push to deepen AI integration for enterprise clients. By enabling seamless collaboration between human employees and autonomous AI agents, this solution supports the view that AI-driven automation is fast becoming central to ServiceNow’s value proposition. Its impact aligns directly with expectations for AI innovations to drive future revenue expansion and margin improvement.

Yet, investors should be aware that, unlike these upbeat signals, some near-term risks, such as challenges from federal spending shifts and intensified competition, could affect...

Read the full narrative on ServiceNow (it's free!)

ServiceNow's narrative projects $19.3 billion revenue and $3.2 billion earnings by 2028. This requires 18.9% yearly revenue growth and a ~$1.7 billion earnings increase from $1.5 billion today.

Uncover how ServiceNow's forecasts yield a $1099 fair value, a 10% upside to its current price.

Exploring Other Perspectives

Compared to consensus, the lowest analysts were expecting ServiceNow’s revenue to grow by just 17.5 percent annually, cautioning that rapid AI adoption and the shift to hybrid pricing models could slow near-term growth. These views highlight how investor expectations can differ widely, and recent earnings may prompt a rethinking of such forecasts.

Explore 14 other fair value estimates on ServiceNow - why the stock might be worth 41% less than the current price!

Build Your Own ServiceNow Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your ServiceNow research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free ServiceNow research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate ServiceNow's overall financial health at a glance.

No Opportunity In ServiceNow?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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