ServiceNow (NOW) Stock Soars on AI-Driven Earnings and 5-for-1 Stock Split!

ServiceNow Stock Movement (Oct 29, 2025): Shares closed around $911.70 on Oct 29 (down ~2.8%) ^[1], then spiked in after-hours trading into the mid-$900s after the earnings release.
Blowout Q3 Results: ServiceNow beat expectations for Q3 FY2025 – subscription revenue grew 21.5% year-over-year to $3.30 billion ^[2] ^[3], and the company raised its full-year sales guidance. CEO Bill McDermott hailed ServiceNow as “the AI platform for business transformation,” citing surging enterprise demand for AI-driven workflow automation ^[4].
5-for-1 Stock Split Approved: The board announced a pending five-for-one stock split (subject to shareholder approval) ^[5] ^[6], a move seen as investor-friendly. This aims to make the high-flying shares more accessible, coming alongside the strong earnings.
Analyst Sentiment & Targets: Wall Street is largely bullish on NOW. The consensus is a “Strong Buy,” with an average 12-month target around $1,117 (roughly +22% from current levels) ^[7]. Top analysts have set targets as high as ~$1,250–$1,300 ^[8] ^[9]. (For example, Morgan Stanley recently upgraded NOW to Overweight with a $1,250 target ^[10].)
Tech and AI Tailwinds: Broader trends favor ServiceNow. Enterprises are rapidly adopting AI-powered software to automate IT and business tasks ^[11], and the tech sector has been buoyed by an AI investment boom. ServiceNow’s entrenched role (its platform is used by ~85% of Fortune 500 companies ^[12]) positions it to benefit from growing cloud/AI budgets.

Stock Performance and Market Reaction

ServiceNow shares have been volatile in late 2025. After an all-time high (~$1,198) earlier in the year, the stock pulled back amid investor caution. On Oct 29, NOW closed at $911.70, down about 2.8% ^[13]. However, following the release of strong earnings and news of the stock split, investors bid the stock up in after-hours trade. By about 4:15 PM ET, the price was around the mid-$900s (roughly a +4% jump) ^[14]. In context, tech-heavy indexes were broadly flat to slightly up – the Nasdaq was modestly higher (+0.3%) by late Oct. 29 ^[15] – suggesting ServiceNow’s move was company-specific.

According to tech analysts, ServiceNow’s recent pullback was largely due to worries over U.S. government IT spending and valuation. A TS2.tech report noted that while the S&P 500 tech sector has climbed this year, ServiceNow lagged because of “concerns over U.S. federal IT budgets and AI-related valuation risk” ^[16]. The October rally implies those concerns eased with the new data: investors now see fresh catalysts in the AI agenda and the stock split.

Strong Q3 Earnings and Stock Split

ServiceNow’s Q3 FY2025 financial results (Sept. 30 quarter) provided the catalysts. Subscription revenue reached $3.299 billion, up 21.5% year-over-year ^[17] – above analyst forecasts (about $3.26B). Total revenue was $3.407B (+22% YoY) ^[18]. On an adjusted basis, earnings came in at $4.82 per share, well above the $4.27 expected ^[19]. In other words, ServiceNow not only beat Wall Street’s estimates on the top and bottom lines, it did so handily. The company also said contract backlog (remaining performance obligations) grew ~21% YoY ^[20], indicating future revenue visibility.

Management highlighted multiple growth engines. CEO McDermott emphasized that “every enterprise” is focused on AI and called ServiceNow “the AI platform for business transformation” ^[21]. CFO Gina Mastantuono noted strong execution across new products: for example, the AI-assistant offering Now Assist, federal government deals, and workflow-data enhancements all came “ahead of plan” ^[22]. The company reiterated that broad enterprise AI adoption is fueling demand: Reuters reported clients increasingly use ServiceNow’s AI-powered tools to manage IT and automate operations ^[23].

Along with the results, ServiceNow announced its board had approved a 5-for-1 split of the common stock ^[24] ^[25]. This split (to be voted on in December) would multiply the number of shares while proportionally reducing the price per share, effectively making the stock cheaper per share. Such splits often attract retail buyers, which could add momentum to the rally.

Analyst Commentary and Price Targets

Wall Street analysts reacted positively. Most brokerage firms maintain Buy/Outperform ratings on NOW. The consensus analyst rating is “Strong Buy,” with an average 12-month price target around $1,117 ^[26]. That implies roughly 20–25% upside from current levels. Notably, top targets are even higher: JMP Securities recently reiterated a $1,300 target ^[27], and industry-specialist Citizens Research is at $1,300 ^[28]. Morgan Stanley upgraded NOW to a Buy (from Hold) in late September with a $1,250 target, arguing that investors had been “missing the forest for the trees” and that ServiceNow can sustain ~20% subscription growth ^[29] ^[30].

In contrast, a few cautious voices remain. For example, Guggenheim trimmed its outlook (to around $640) on concerns that AI rollout might be slower than expected ^[31]. UBS lowered its price target to $1,075 (still a Buy) after channel checks showed mixed feedback on ServiceNow’s AI initiatives ^[32]. But the overall picture is bullish: Directorstalk (via TS2) notes 41 of 46 analysts rate the stock a Buy or Strong Buy, with only one Sell ^[33]. Major bulls such as Oppenheimer (maintaining a $1,150 Outperform) and Stifel ($1,200 Buy) have kept or raised targets based on improving enterprise IT spending trends ^[34] ^[35].

Analysts point to ServiceNow’s strong fundamentals: about 8,400 enterprise customers and a ~98% subscription renewal rate ^[36]. Its trailing-12-month revenue is up ~22% YoY ^[37]. This growth rate is higher than many large-cap software peers, albeit at a higher valuation (ServiceNow’s forward P/E is around 45× versus ~33× for Microsoft and ~19× for Salesforce ^[38]). Optimists argue the high valuation is justified by the business’s consistent ~20% growth and expanding profit margins ^[39] ^[40], especially as AI adds new revenue streams. For example, TS2 quotes Morgan Stanley saying NOW is “well positioned to deliver generative AI capabilities,” and Oppenheimer calling the recent price dip a “unique opportunity” to buy a quality company ^[41].

AI Strategy, Partnerships and Growth Drivers

ServiceNow has doubled down on AI and ecosystem partnerships in 2025. In September it rolled out a major platform update (“Zurich” release) to embed AI and simplify development, and launched an “AI Experience” interface for conversational AI at work ^[42]. The company has also inked several high-profile alliances: it unveiled a collaboration with NVIDIA (including a new enterprise AI model) and purchased up to a 50% stake in Genesys (a leader in AI-powered contact center software) via a ~$750 million investment ^[43]. This Genesys tie-up integrates customer-service AI data into ServiceNow’s workflow platform, potentially opening new market synergies.

ServiceNow’s technology is being applied in diverse ways. For instance, it became the workflow partner for Ferrari’s Formula 1 team, optimizing racing operations in real time ^[44]. In the public sector, it secured major government deals: in addition to a recent U.S. federal contract, the company won a $124 million UK Veterans Affairs agreement for AI-driven workflow modernization ^[45]. (Overall, about 10% of ServiceNow’s revenue comes from governments, and the firm has offered steep discounts to spur federal IT transformation.) ServiceNow is also in the process of acquiring AI startup Moveworks for $2.85 billion (subject to U.S. regulatory approval), which would further enhance its AI chatbot capabilities ^[46].

These initiatives feed into the growth narrative. The idea is that as businesses increasingly automate IT and customer workflows with AI, ServiceNow’s platform will become more indispensable. As one analyst put it, new guidance or commentary on AI demand could “sway the stock’s next move,” validating the bullish or bearish cases ^[47]. For now, investors are watching whether ServiceNow can deliver sustained ~20%+ revenue growth while expanding profit margins on top of its AI investments. The strong Q3 result and guiding raise suggest that so far, ServiceNow is on track.

Broader Tech Trends and Outlook

ServiceNow’s performance must be viewed in the context of the wider tech market. AI and cloud computing have been broad market tailwinds: enterprise IT spending is projected to climb (Gartner expects global IT budgets to grow by ~8%+ in 2025), and vendors with AI-focused offerings have been in favor. Reuters noted that companies like ServiceNow and Salesforce are benefiting as “enterprise clients turn to AI-powered software… to manage their IT services and automate operations” ^[48]. This sector enthusiasm has lifted many software and cloud stocks – for example, the S&P 500 information technology index is up modestly for the year, while big software names have seen similar positive earnings reactions.

Despite this, ServiceNow had lagged some peers in 2025, partly due to investor caution over its lofty valuation and federal budget uncertainty ^[49]. The recent deal flow and product rollouts are intended to offset those worries. If the tech rally continues and ServiceNow’s AI tools prove out, analysts see further upside. According to StockAnalysis.com, consensus forecasts anticipate revenue of ~$13.29 billion in 2025 (about +21% YoY) and $15.76 billion in 2026 (+18.6% YoY) ^[50] ^[51]. That would support future earnings growth: analysts on average expect around $17–20 per share in adjusted EPS over the next two years (versus $16.89 full-year 2025 in guidance).

In summary, the latest developments paint a positive medium-term picture. The combination of strong quarterly results, aggressive AI initiatives, and supportive industry trends has many forecasters leaning bullish. Median 12-month price targets (roughly $1,100–1,200) imply double-digit upside, assuming ServiceNow maintains its growth pace. The proposed stock split may broaden the investor base. Of course, much depends on execution – especially on integrating AI acquisitions and sustaining renewal rates – but for now the consensus is that ServiceNow’s AI-driven strategy could power further gains.

Sources: Company filings and press releases ^[52] ^[53]; Reuters, Yahoo Finance and Investing.com news ^[54] ^[55]; analysis from StockAnalysis.com and TS2.tech ^[56] ^[57]. (All figures as of Oct. 29, 2025.)

ServiceNow (NOW) Q3 2025 Earnings Report: $4.82 EPS Beat, Stock Split, and AI Platform Dominance

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ServiceNow (NOW) Stock Soars on AI-Driven Earnings and 5-for-1 Stock Split