Software Sundays: ServiceNow 2Q26 Preview - AI Narrative Shifting to ROI, Outcomes Benefits NOW

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Software Sundays: ServiceNow 2Q26 Preview - AI Narrative Shifting to ROI, Outcomes Benefits NOW

July 19, 2026

ServiceNow 2Q26 Earnings Preview

We reiterate our OW rating on NOW shares and raise our PT to $141

(7.5x C27 EV/S, 21x FCF vs one-year NTM average multiple of 9x, 27.5x,

respectively) from $122 as software multiples begin to expand again

combined with our relatively positive checks that imply sustained growth

and defensibility with the ServiceNow platform, NT growth driven by AI,

and investors likely shifting views to C27 where recent M&A becomes

organic and AI consumption ramps. Overall, checks tracked relatively

positive with partners coming in line to ahead of their growth expectations

in 2Q26. Growth is being driven by AI traction as well as expansion into

security and governance (Armis, Veza, AI Control Tower). Seat growth

remains relatively stable NT with LT risks mitigated by continued strong

trends in renewal rates. Now Assist and related AI ACV continues to be

driven by upgrades with mixed NT trends in terms of AI consumption on

the platform as certain customers and partners appear relatively early in

modernization trends leading to AI-led workflows. That said, ServiceNow

appears well-positioned into 2H C26 and C27 as enterprises prioritize ROI

in deploying AI, with the ServiceNow platform anchoring on governance,

security, and ongoing agentic monitoring in this environment and very

limited churn identified by checks as the platform’s system of record (SoR)

status in IT seems to be well poised to extend to AI. We continue to

view ServiceNow well positioned to benefit from secular AI growth trends

both as a trusted, secure AI workflow platform hinged on its CMDB SoR

status with customers and internally (supporting Rule of 60+ goals in C30)