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Is There Plenty of Room Left to Buy ServiceNow After It Spiked?

ServiceNow just posted a 10% single-day surge on blockbuster AI numbers, but the stock still sits roughly 22% below last year's peak with its analyst target nearly in reach. Whether that combination signals a rare re-entry window or a value…

By Alex Sirois
Published August 28, 2026, 8:19am ET · 3 min read

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A Black woman with dreadlocks styled in a bun and wearing glasses smiles while looking at a multi-monitor setup displaying colorful stock market charts. She is seated at a white desk in a modern office, wearing a brown blouse, with her hands on a white keyboard and mouse. A tablet displaying a chart is also on the desk, along with a white coffee cup. In the blurred background, other professionals are visible working.
A financial analyst monitors market data and stock performance across multiple screens, reflecting the careful consideration needed when evaluating companies like ServiceNow after significant price movements. © Andrey_Popov / Shutterstock.com

At $138.43, ServiceNow (NYSE:NOW | NOW Price Prediction) screens as attractive on fundamentals, though the setup favors incremental accumulation over chasing. The stock just jumped 10.04% in a single session and 25.14% over the past month, forcing investors to decide whether the rebound signals a re-rating or a bounce inside a broken chart.

ServiceNow sells the digital workflow platform that enterprises use for IT service management, employee services, customer workflows, and security and AI governance. Its Xanadu and AI Pro platform tier has crossed $1 billion in annual contract value, and management positions the company as the orchestration layer for agentic AI rather than a seat-based application vendor. After a brutal drawdown from last September’s highs, the recovery to $138.43 now sits just above the $142.23 analyst target.

Why the AI Control Tower Story Justifies Paying Up

Q2 delivered revenue of $3.987 billion, up 24.01% year over year, with subscription revenue growing 24.5% and a 98% renewal rate. ServiceNow AI ACV crossed $1 billion, agentic deployments increased ninefold in nine months, and deals including five or more AI products grew 5.5x year over year.

Management raised full-year subscription revenue guidance to $15.76 to $15.78 billion and reiterated a 35% free cash flow margin. CEO Bill McDermott called Q2 “exceptional” and said the company is “operating to the Rule of 56, well on our way to the Rule of 60.” With forward earnings around 31x, buyers get 20%+ growth at a multiple well below prior peaks.

Why the Bear Case Still Deserves Airtime

The rally has not repaired the damage. Shares remain down 22.05% over the past year and 9.64% year to date. GAAP profitability weakened, with operating income falling 54.75% year over year and net income declining 22.6% as amortization from Moveworks, Veza, and Armis hit the P&L.

Q2 also benefited from U.S. Federal on-premise revenue pulled forward from Q3, and Q3 cRPO faces a $35 million FX headwind. At 79x trailing earnings and 9x sales, any deceleration or hyperscaler-driven gross margin slippage could quickly compress the multiple.

Why Patience Has a Real Cost Here

The waiting case rests on two facts. Shares trade near the analyst target, and the 50-day moving average of $110.35 sits well below the current price, meaning technicals are extended. A pullback toward the 200-day of $119.58 would offer a better entry.

Yet 500-plus customers went live on AI Control Tower within six months of launch, and 50% of net new business is non-seat-based. Waiting for a cleaner setup risks missing the re-rating McDermott openly forecasts.

Data Behind the Verdict

Shares currently trade at $138.43 against a consensus target of $142.23, implying roughly 3% near-term upside. Of 49 analysts, 10 rate the stock Strong Buy, 34 Buy, 3 Hold, 1 Sell, and 1 Strong Sell. NOW is down 9.64% year to date while the S&P 500 has advanced roughly 9% over the same stretch, leaving a wide relative-performance gap that bulls expect to close.

Incremental Accumulation Framework

At $138.43, ServiceNow screens attractively on fundamentals. The AI monetization flywheel is measurable: $1 billion in AI ACV, ProPlus pricing uplifts above 30%, and a $29 billion RPO backlog imply subscription growth stays above 20% through 2027. The path to appreciation runs through Q3 earnings, where a clean beat could push shares back toward the $177 level from a year ago.

The thesis breaks if net new ACV growth decelerates below 20%, if GAAP margin damage from acquisitions persists into 2027, or if enterprise AI budgets consolidate around hyperscalers rather than orchestration layers. Investors weighing entries may prefer scaling in over several tranches rather than committing at a 10% single-day gap.

ServiceNow is one of the cleanest high-growth software balance sheets in the market, and the current price pays for growth without being overpriced.

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Alex Sirois

Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.

Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.

At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.

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