Key Takeaways:
- ServiceNow is still growing quickly, but the stock has been hit by broader fears that fast-moving AI tools could pressure traditional software valuations.
- ServiceNow stock could reasonably reach $150 per share by December 2028, based on our valuation assumptions.
- This implies a total return of 69% from today’s price of $89, with an annualized return of 21% over the next 2.7 years.
What Happened?
ServiceNow (NOW) has become one of the clearest examples of how the market is reevaluating software stocks in 2026. The company is still posting strong revenue growth, but investors have become more cautious as newer AI products raise questions about how durable older software business models will be.
Reuters reported on April 9 that the broader S&P 500 Software and Services Index was down 25.5% for the year as investors worried that AI tools could automate many human tasks and weaken traditional software demand.
That concern has mattered even more for ServiceNow because the stock had traded at a premium valuation for years. Reuters reported in late January that ServiceNow fell 11% after earnings, even though it issued subscription revenue guidance above estimates, because investors were already focused on whether AI could reshape software pricing and app creation.
Management has responded by pushing the platform deeper into AI rather than stepping back from it. On April 9, ServiceNow said its full product portfolio would become AI-enabled, with AI, data connectivity, workflow execution, security, and governance built into every offering, while also launching Context Engine to give AI agents better enterprise context.
That announcement matters because ServiceNow is trying to show customers that it can be the system that governs and executes work across the enterprise, not just a workflow tool that sits beside AI.
The underlying operating results still look strong. ServiceNow reported Q4 2025 subscription revenue of $3.5 billion, up 21%, and cRPO of $12.9 billion, up 25%, while Bill McDermott said the company “significantly beat Q4 expectations” and issued “exceptional guidance for 2026.”
Here’s why ServiceNow stock could stay volatile in the near term but remain central to the market’s debate over AI, software pricing, and enterprise automation.
What the Model Says for NOW Stock
We analyzed the upside potential for ServiceNow stock using valuation assumptions based on its durable subscription growth, expanding enterprise AI products, and rising profitability as the business scales.
Based on estimates of 19.2% annual revenue growth, 32.2% operating margins, and a normalized P/E multiple of 21.4x, the model projects ServiceNow stock could rise from $89 to $150 per share.
That would be a 69.0% total return, or a 21.3% annualized return over the next 2.7 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for NOW stock:
1. Revenue Growth: 19.2%
ServiceNow has kept growing at a rate that is still well above most large software peers. Revenue increased from $11.0 billion in 2024 to $13.3 billion in 2025, which was 20.9% growth. In Q4 alone, total revenue rose 20.5%, and subscription revenue rose 21%.
The company’s backlog also supports the idea that demand remains healthy. cRPO, which measures contracted revenue expected to be recognized over the next 12 months, reached $12.85 billion at year-end 2025 and grew 25% year over year. ServiceNow also ended the quarter with 603 customers generating more than $5 million in ACV, up about 20%, while transactions above $1 million in net new ACV rose nearly 40%.
AI is also becoming a bigger selling point inside the platform. ServiceNow said Now Assist net new ACV more than doubled year over year in Q4, and management tied 2026 guidance partly to demand for newer AI products and the Moveworks acquisition.
Based on analysts’ consensus estimates, we use a 19.2% revenue growth forecast, which is slightly below the company’s 2025 growth rate and close to its 2026 subscription revenue guide.
2. Operating Margins: 32.2%
The margin story is one of the strongest parts of the ServiceNow thesis. GAAP operating margin rose from 12.7% in 2024 to 15.1% in 2025, while operating income increased 43% to $2.0 billion. That shows the business is converting scale into real profit, not just revenue growth.
On a forward basis, management’s own 2026 framework lines up closely with the model. ServiceNow guided for a 31.5% non-GAAP operating margin in Q1 2026 and 32% for full-year 2026, along with a 36% free cash flow margin.
Cash generation reinforces that point. Free cash flow rose from $3.4 billion in 2024 to $4.6 billion in 2025, and free cash flow margin improved to 34.5% based on the annual financials.
Based on analysts’ consensus estimates, we use a 32.2% operating margin assumption because ServiceNow is still investing heavily in sales, R&D, and AI, but it is also showing clear operating leverage.
3. Exit P/E Multiple: 21.4x
The valuation multiple is where most of the debate sits today. ServiceNow’s LTM P/E is about 53.3x, but the model uses a 21.4x exit multiple, which is far below the stock’s recent historical range and far below the 44.8x one-year historical P/E shown in the valuation model.
The lower multiple reflects how much sentiment has changed around software. Reuters reported in January and April that investors have been rotating out of software because they fear AI tools could weaken traditional software pricing, app development, and seat-based business models. Even after a rebound in software shares on April 13, that debate has not gone away.
ServiceNow still has reasons to merit a premium relative to many peers. The company finished 2025 with $6.3 billion in cash and short-term investments, net cash of $7.7 billion, and a board authorization for an additional $5 billion in buybacks, plus an imminent $2 billion accelerated repurchase announced with Q4 results.
Based on analysts’ consensus estimates, we use a 21.4x exit P/E multiple because it balances ServiceNow’s strong quality and growth against a market that is clearly less willing to pay peak-era software valuations.
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What Happens If Things Go Better or Worse?
Different scenarios for NOW stock through 2035 show varied outcomes based on AI adoption, margin execution, and valuation discipline (these are estimates, not guaranteed returns):
- Low Case: AI spending shifts toward infrastructure and custom-built tools, and valuation compresses further → 13.9% annual returns
- Mid Case: ServiceNow keeps scaling enterprise AI workflows and expands margins steadily → 18.3% annual returns
- High Case: AI products, large-deal activity, and platform standardization remain exceptionally strong → 22.4% annual returns
Even in the lower case, the model still points to positive annual returns because ServiceNow is growing fast, generates significant free cash flow, and carries a net cash position rather than net debt. The company also added a $3 billion unsecured revolving credit facility that matures in 2031, which gives it more liquidity flexibility on top of its existing balance sheet strength.
Going forward, the stock will likely move with three things. First, investors will focus on Q1 results on April 22 and whether subscription revenue, cRPO, and margins track management’s targets.
Second, they will watch the May 4 Financial Analyst Day and the May 5-7 Knowledge event for proof that ServiceNow’s AI-native platform strategy is translating into larger deals and stronger product adoption. Lastly, they will keep watching whether the broader software selloff tied to AI disruption fears begins to stabilize.
See what analysts think about NOW stock right now (Free with TIKR) >>>
Should You Invest in ServiceNow?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up NOW, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track NOW alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Analyze ServiceNow stock on TIKR Free→
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
