At $108.73, ServiceNow (NYSE:NOW | NOW Price Prediction) is a Buy, with a 12-month price target of $145. A valuation reset has repriced one of enterprise software’s most durable franchises, and the price now matches the fundamentals.
ServiceNow runs the cloud workflow platform large enterprises use to automate IT, HR, security, and customer operations. Under CEO Bill McDermott, the company has repositioned itself as the AI control tower for agentic AI, with the closed Moveworks deal and pending Armis and Veza acquisitions expanding the platform’s reach into security and identity.
The slide from $204.26 a year ago reflects sector-wide multiple compression and post-earnings volatility, not deteriorating fundamentals.
Why the Reset Created a Rare Entry Point
NOW trades at a forward P/E of 24, well below where this growth profile historically clears. FY25 revenue grew 20.88% to $13.278 billion, free cash flow grew 34% to $4.576 billion, and Q1 26 subscription revenue hit $3.671 billion on 19% constant-currency growth.
Demand remains elite. Renewal rate held at 97%, customers spending over $1 million on Now Assist grew over 130% year-over-year, and McDermott raised the 2026 Now Assist target from $1 billion to $1.5 billion.
Why the Bear Case Still Has Teeth
Bears will point to a trailing P/E of 60.79 and argue the multiple still embeds heroic AI assumptions. Subscription gross margin compressed to 82.5% from 84.5% as AI infrastructure scaling weighs on unit economics. Armis adds a 75 basis point operating margin headwind and a 200 basis point free cash flow margin drag in 2026.
Integration risk across three acquisitions is real, US federal budget tightening was flagged last quarter, and prediction markets imply a target of $103.70, roughly 4.63% below current levels. Insiders have not stepped in to buy on the open market, with recent acquisitions tied to RSU vesting rather than conviction purchases.
Why Patience Has Its Own Case
The hold view rests on timing. NOW has already rallied 20.16% over the past month and 9.07% over the past week, so the easiest part of the rebound may be behind.
The fundamentals support a quality compounder, yet the multiple remains demanding on trailing earnings. A clean Q2 print confirming margin recovery and continued Now Assist acceleration would tip the verdict decisively without the risk of chasing a recent bounce.
What the Numbers Actually Say
NOW trades at $108.73 with a market cap near $112.13 billion. The analyst consensus target of $142.77 across 48 analysts (9 Strong Buy, 34 Buy, 4 Hold, 1 Sell) implies upside of roughly 31%. Trailing P/E sits at 60.79 against a forward P/E of 24, on FY25 EPS of $3.51. Shares have shed 46.77% over the past year and 29.02% year-to-date, materially trailing the S&P 500 over both stretches.
At $108.73, ServiceNow Is a Buy
The path to $145 runs through three catalysts over the next 12 months: Now Assist scaling toward the raised $1.5 billion target, Armis accelerating subscription growth by 125 basis points, and operating margin re-expanding toward the 32% guided run rate.
A forward multiple of 24 against 21% subscription growth and a 44% Q1 free cash flow margin is the kind of setup that rewards patient capital. The $5 billion buyback authorization and pending $2 billion accelerated repurchase put a floor under shares.
What invalidates the thesis is cRPO growth slipping below the high teens, evidence that AI monetization stalls, or a meaningful federal pullback. Watch quarterly cRPO, Now Assist deal count, and the 97% renewal rate. Each tells you whether the entrenched enterprise relationships at the core of the moat are widening or fraying.
At this forward multiple against this growth profile, ServiceNow is the rare reset where the business stayed elite while the market lost its nerve.
Top Gaining Stocks
Top Losing Stocks