ServiceNow (NOW) AI Stock Analysis

• Market Cap: $112.77B
• Dividend Yield: N/A
• Average Volume (3M): 20.96M
• Price to Earnings (P/E): 64.3
• Beta (1Y): 1.40
• Revenue Growth: 21.05%
• EPS Growth: 28.67%
• Country: US
• Employees: 26,293
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.92
• Shares Outstanding: 1,046,000,000
• 10 Day Avg. Volume: 19,546,389
• 30 Day Avg. Volume: 20,959,569
• PEG Ratio: 4.05
• Price to Book (P/B): 12.25
• Price to Sales (P/S): 11.96
• P/FCF Ratio: 34.72
• Enterprise Value/Market Cap: 0.93
• Enterprise Value/Revenue: 7.90
• Enterprise Value/Gross Profit: 10.19
• Enterprise Value/Ebitda: 34.77
• 1Y Price Target: $191.20
• Price Target Upside: 83.37% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 33
• EPS Forecast (FY): 4.18
• Revenue Forecast (FY): $15.96B

• Rating: 77 Outperform
• Price Target: $122.00 ▲(17.00% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by strong financial performance (high margins, low leverage, and strong free cash flow) and a favorable earnings outlook with continued high-teens subscription growth and margin expansion. These positives are tempered by weak technicals (price below all key moving averages and negative MACD) and a rich valuation (P/E ~64), which increase sensitivity to any growth or margin disappointments.

Positive Factors

Recurring subscription model & upsell strength

ServiceNow’s subscription-centric model drives durable revenue visibility and high renewal potential. Large enterprise deals, growing CRPO/RPO and multi-year contracts support predictable cash flows and steady upsell/cross-sell, enabling sustainable top-line and scalable operating leverage.

High margins and robust free cash flow

Consistently high gross margins and significant free cash flow generation provide structural capacity to reinvest in product, fund M&A, and return capital. Strong FCF relative to earnings supports financial flexibility and underpins sustained margin expansion and shareholder returns over the medium term.

AI monetization and strategic ecosystem expansion

Rapid adoption of Now Assist and expanded partnerships (OpenAI, Anthropic, Microsoft) create a durable new revenue stream and deepen platform stickiness. AI-led upsell and workflow expansion broaden TAM and support multi-year monetization as customers build AI-native processes on the platform.

Negative Factors

Decelerating revenue growth trajectory

A marked slowdown in trailing revenue growth threatens operating leverage and could compress future margin expansion if persistent. Slower top-line puts pressure on expectations for long-term profitability improvement and raises execution demands for product-led upsell and net-new enterprise acquisition.

Gross-margin pressure from hyperscaler & AI costs

Shifts to hyperscaler capacity and increasing LLM inference costs are structural margin headwinds. If cloud/inference cost trends persist, ServiceNow must either accept lower margins, reprice products, or realize greater operational offsets—each path can erode durable profitability or slow adoption.

M&A dilution and integration execution risk

Aggressive acquisition activity to extend the platform increases near-term margin dilution and integration complexity. Failed or slow integrations could delay revenue synergies, strain management bandwidth, and reduce expected returns, creating multi-quarter execution risk to structural profitability gains.

ServiceNow Business Overview & Revenue Model

Company Description

ServiceNow, Inc. provides enterprise cloud computing solutions that defines, structures, consolidates, manages, and automates services for enterprises worldwide. It operates the Now platform for workflow automation, artificial intelligence, machine learning, robotic process automation, performance analytics, electronic service catalogs and portals, configuration management systems, data benchmarking, encryption, and collaboration and development tools. The company also provides information technology (IT) service management applications; IT service management product suite for enterprise's employees, customers, and partners; IT business management product suite; IT operations management product that connects a customer's physical and cloud-based IT infrastructure; IT Asset Management to automate IT asset lifecycles; and security operations that connects with internal and third party. In addition, it offers governance, risk, and compliance product to manage risk and resilience; human resources, legal, and workplace service delivery products; safe workplace applications; customer service management product; and field service management applications. Further, it provides App Engine product; IntegrationHub enables application to extend workflows; and professional, industry solutions, and customer support services. It serves government, financial services, healthcare, telecommunications, manufacturing, IT services, technology, oil and gas, education, and consumer products through direct sales team and resale partners. It has a strategic partnership with Celonis to help customers identify and prioritize processes that are suitable for automation. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. The company was founded in 2004 and is headquartered in Santa Clara, California.

How the Company Makes Money

ServiceNow generates revenue primarily through subscription-based licensing for its cloud platform and applications. Customers pay annual or multi-year fees to access its suite of products, which include ITSM, ITOM, and CSM solutions, along with additional modules for security, governance, and compliance. A significant portion of the revenue comes from upselling and cross-selling additional features and products to existing clients. ServiceNow also benefits from a robust ecosystem of partnerships with technology providers, system integrators, and consulting firms, which help drive customer acquisition and implementation services. Additionally, the company invests in innovation and product development to maintain a competitive edge, further enhancing its revenue potential.

ServiceNow Financial Statement Overview

Summary

Strong overall fundamentals supported by high and durable gross margins (~77%–79%), meaningfully improved profitability (TTM net margin ~13.7%; EBIT margin ~17.4%), low and declining leverage (D/E ~0.21 TTM), and robust free cash flow generation ($4.6B TTM). Key risk in the provided data is the sharp deceleration in TTM revenue growth (4.8%), which could pressure future operating leverage if sustained.

Income Statement

Revenue has compounded strongly from $4.5B (2020) to $11.0B (2024) and $13.3B in TTM (Trailing-Twelve-Months), supported by consistently high gross margins (~77%–79%). Profitability has structurally improved since 2021–2022 (net margin ~3%–4%), reaching ~13.7% in TTM, with operating margin also stepping up (EBIT margin ~17.4% TTM). Key watch-out: TTM revenue growth rate is shown as 4.8%, a sharp deceleration versus ~22%–30% levels in prior annual periods, which could pressure the valuation and future margin expansion if it persists.

Balance Sheet

The balance sheet looks conservative for a software business: leverage is low and improving, with debt-to-equity down from ~0.75 (2020) to ~0.24 (2024) and ~0.21 in TTM (Trailing-Twelve-Months). Equity has expanded meaningfully (to ~$14.8B TTM), supporting a larger asset base (~$26.0B TTM). Returns on equity are healthy (mid-teens in 2024/TTM), though below the 2023 peak, suggesting profitability is solid but not accelerating at the same pace as the balance sheet is scaling.

Cash Flow

Cash generation is a major strength: operating cash flow rose from ~$1.8B (2020) to $4.3B (2024) and $5.4B in TTM (Trailing-Twelve-Months), with free cash flow reaching $4.6B TTM. Free cash flow growth is strong in TTM (15.6%), and free cash flow remains closely aligned with earnings (roughly 0.8x net income across periods), indicating generally good earnings quality. The main drawback is that the provided operating cash flow coverage metric remains below 1.0 and only modestly improving, implying cash flow is strong but not as dominant relative to the referenced base as best-in-class peers.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	13.28B	10.98B	8.97B	7.25B	5.90B
Gross Profit	10.29B	8.70B	7.05B	5.67B	4.54B
EBITDA	3.00B	2.23B	1.59B	768.00M	729.00M
Net Income	1.75B	1.43B	1.73B	325.00M	230.00M
Balance Sheet
Total Assets	26.04B	20.38B	17.39B	13.30B	10.80B
Cash, Cash Equivalents and Short-Term Investments	6.28B	5.76B	4.88B	4.28B	3.30B
Total Debt	3.20B	2.28B	2.28B	2.23B	2.21B
Total Liabilities	13.07B	10.77B	9.76B	8.27B	7.10B
Stockholders Equity	12.96B	9.61B	7.63B	5.03B	3.69B
Cash Flow
Free Cash Flow	4.58B	3.42B	2.70B	2.17B	1.79B
Operating Cash Flow	5.44B	4.27B	3.40B	2.72B	2.19B
Investing Cash Flow	-1.69B	-2.50B	-2.17B	-2.58B	-1.61B
Financing Cash Flow	-2.34B	-1.34B	-803.00M	-344.00M	-506.00M

ServiceNow Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 104.27
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOW, the sentiment is Negative. The current price of 104.27 is below the 20-day moving average (MA) of 112.67, below the 50-day MA of 134.63, and below the 200-day MA of 173.95, indicating a bearish trend. The MACD of -8.75 indicates Negative momentum. The RSI at 33.79 is Neutral, neither overbought nor oversold. The STOCH value of 63.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NOW.

ServiceNow Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRM	80 Outperform	$175.96B	25.06	12.18%	0.63%	8.41%	22.92%
NOW	77 Outperform	$112.77B	64.31	15.49%	―	21.05%	28.67%
WDAY	71 Outperform	$37.51B	58.79	7.34%	―	13.35%	-60.76%
DDOG	65 Neutral	$43.05B	407.16	3.34%	―	26.63%	-46.13%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TEAM	56 Neutral	$22.13B	-111.57	-13.47%	―	19.51%	53.35%
SNOW	52 Neutral	$60.25B	-44.41	-53.32%	―	28.48%	-19.12%

ServiceNow Corporate Events

ServiceNow CEO Plans Significant Insider Share Purchase

ServiceNow disclosed that several top executives, including Chairman and CEO William R. McDermott and other senior leaders, have terminated their Rule 10b5-1 trading plans, cancelling all future pre-planned sales of ServiceNow common stock by these individuals. Separately, the company reported that on February 13, 2026, McDermott entered into an agreement to purchase $3 million of ServiceNow shares on February 27, 2026, signaling an increase in insider share ownership that may be viewed as a vote of confidence in the company by its leadership.

The planned stock purchase, which will occur at prevailing market prices and be reported in a subsequent regulatory filing, follows the termination of the trading plans and reflects a shift from pre-scheduled selling to direct buying by ServiceNow’s CEO. These actions could influence investor perception of the company’s prospects and governance, as they underscore a stronger alignment between executive interests and shareholder value through increased personal investment in the stock.

The most recent analyst rating on (NOW) stock is a Buy with a $114.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.

ServiceNow Strengthens Finance Leadership With New Accounting Chief

On February 10, 2026, ServiceNow’s board appointed Danielle Fontaine as Chief Accounting Officer and Corporate Controller, effective February 17, 2026, while promoting outgoing chief accounting officer Kevin McBride to Executive Vice President, Accounting and Corporate Services. Fontaine, who has been ServiceNow’s Assistant Controller since September 2021, brings prior experience from Alphabet, Gap and Ernst & Young, and will receive a compensation package including a $420,000 base salary, performance-based bonus opportunity, and a four-year vesting RSU award.

The appointment consolidates a seasoned internal candidate with extensive technical and corporate accounting experience into a key financial oversight role, while elevating McBride to a broader executive position overseeing accounting and corporate services. The changes underscore ServiceNow’s focus on strengthening its finance leadership bench and governance structure, with standard executive arrangements confirming there are no special side agreements, related-party relationships, or disclosable transactions involving Fontaine.

The most recent analyst rating on (NOW) stock is a Buy with a $155.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.

ServiceNow tops Q4 guidance and accelerates AI expansion

On January 28, 2026, ServiceNow reported that it had exceeded its guidance across all fourth-quarter 2025 topline growth and profitability metrics, posting subscription revenue of $3.47 billion, up 21% year over year, and total revenue of $3.57 billion, up 20.5%, while current remaining performance obligations rose 25% to $12.85 billion and overall remaining performance obligations climbed 26.5% to $28.2 billion. The company highlighted rapid uptake of its AI offerings, including Now Assist whose net new ACV more than doubled, expanded partnerships with Anthropic, OpenAI, Microsoft, Figma, NTT DATA, Fiserv, and Panasonic Avionics, closed its acquisition of Moveworks, and announced plans to acquire Armis and Veza to build an end-to-end AI-driven security and identity stack. ServiceNow also stepped up capital returns with an additional $5 billion authorized for share repurchases following $597 million of buybacks in Q4, signaled an imminent $2 billion accelerated repurchase, completed a 5-for-1 stock split in December 2025, and committed CA$110 million to support AI adoption in Canada’s public sector, reinforcing its growth ambitions, AI leadership narrative, and confidence in long-term demand from global enterprise and government customers.

The most recent analyst rating on (NOW) stock is a Hold with a $148.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.

ServiceNow Extends CEO McDermott Agreement, Updates Severance Policy

On December 23, 2025, ServiceNow amended the employment agreement of Chairman and CEO William R. McDermott, effective January 1, 2026, to secure his service with the company through at least December 31, 2030, in roles that may include CEO, co-CEO, Executive Chairman or Non-Executive Chairman, with compensation aligned to company performance and the scope of his responsibilities. The company also revised its Executive Severance Policy, effective January 1, 2026, enhancing and clarifying severance, equity vesting and benefit entitlements for the CEO in scenarios including qualifying terminations with or without a change in control, retirement after age 65, death, and disability, signaling an emphasis on leadership continuity and structured executive transition planning that could influence governance stability and long-term strategic execution for shareholders and other stakeholders.

The most recent analyst rating on (NOW) stock is a Buy with a $255.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.

ServiceNow Files Prospectus for Moveworks Acquisition Shares

On December 15, 2025, ServiceNow filed a prospectus supplement with the SEC for the resale of shares acquired by stockholders through the acquisition of Moveworks, Inc. This filing may impact the company’s stock liquidity and shareholder composition.

The most recent analyst rating on (NOW) stock is a Sell with a $775.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.

ServiceNow Shareholders Approve 5-for-1 Stock Split

On December 5, 2025, ServiceNow‘s shareholders approved a 5-for-1 stock split, which will be effective on December 17, 2025. This move is expected to increase the number of shares and adjust trading on a split-adjusted basis starting December 18, 2025, potentially enhancing the company’s market positioning and shareholder value.

The most recent analyst rating on (NOW) stock is a Buy with a $1225.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.