ServiceNow Stock Rises 29% in August on Strong AI Growth

ServiceNow shares surged 29% in August following strong second-quarter earnings and rapid growth in its AI product, according to multiple financial reports. The stock closed at $127.23, remaining 16% below its year-to-date opening price but outperforming the broader software sector.

The company reported non-GAAP earnings per share of $0.90 for Q2, beating the consensus estimate of $0.86. Revenue reached $3.99 billion, a 24% increase year-over-year, with subscription revenue growing 24.5% to $3.88 billion, surpassing guidance expectations, as reported by finance.yahoo.com.

ServiceNow's AI product exceeded $1 billion in annual contract value, with agentic deployments increasing ninefold over nine months. The company logged 123 transactions above $1 million in net new annual contract value, marking a 40% year-over-year rise. CEO Bill McDermott described the quarter as evidence that the company is "operating to the Rule of 56, well on our way to the Rule of 60," indicating strong operational momentum.

Wall Street consensus currently targets a price of $142.23 for ServiceNow stock, with a 52-week high of $194.73. The stock completed a five-for-one split in December 2025, setting $150 as a realistic near-term price goal, according to finance.yahoo.com.

Analysts expect AI revenues for ServiceNow to surpass $1.5 billion by the end of 2026 and reach approximately $9.6 billion by 2030. About half of net new annual contract values are now based on consumption pricing, which challenges earlier concerns about disruptions to the company's SaaS business model, according to seekingalpha.com.

ServiceNow trades at 25.4 times forward 2027 earnings, well below its 2024 peak valuation of over 60 times earnings, suggesting room for growth. An analyst disclosed owning shares with an average cost basis of $103.30, expressing regret for not increasing the position earlier.

Despite a recent decline of nearly 2% on a Wednesday trading session due to profit-taking, ServiceNow remains above several key moving averages. The stock traded 1.7% above its 20-day simple moving average of $122.30 and 12.7% above its 50-day average, though the longer-term trend remains mixed as the 50-day average remains below the 200-day average, suggesting incomplete trend recovery, as reported by benzinga.com.

Key resistance for the stock stands near $139, with support around $117.50. Momentum indicators signal some cooling, meaning the rally may need renewed buyer interest to sustain gains.

Wall Street firms have maintained Buy or Overweight ratings on ServiceNow, with price targets ranging from $140 to $175. Bank of America Securities raised its target to $150, TD Cowen maintained $140, and Wells Fargo raised its target to $175 in August, according to benzinga.com.

Jim Cramer highlighted a market rotation favoring enterprise software like ServiceNow over tech and data center stocks amid political opposition to data center construction and bond market volatility, as noted by pluang.com.

ServiceNow’s recent AI partnerships and product momentum contributed to its strong share price rebound over 30 and 90 days, signaling renewed investor interest after a weaker period. The stock’s current price sits well below a narrative fair value estimate of $266, suggesting potential undervaluation if growth and margins continue to improve, according to simplywall.st.