NEW YORK, August 19, 2026, 13:40 EDT
- ServiceNow shares gained 6.9% after Bank of America raised its price target to $150.
- The surge brought the consensus target to just 10.4% higher than the market price.
- Contract growth stays above 20%, though third-quarter comparisons are increasingly challenging.
Shares of ServiceNow NYSE:NOW surged 6.9% to $127.75 on Wednesday after Bank of America increased its price target to $150 from $130 and reiterated its Buy recommendation.
The change is significant as it narrows much of the stock’s valuation difference. Bank of America projects a 17.4% increase, while the consensus analyst forecast stands at 10.4%.
This alters the outlook for investors. Ongoing contract expansion is now necessary for a rebound, rather than just a disappearance of previous AI disruption concerns.
Strong rebound, but not yet a complete recovery
| Intraday snapshot | ServiceNow | Salesforce | Workday |
|---|---|---|---|
| Price | $127.75 | $205.34 | $198.53 |
| Day change | +6.91% | +4.69% | +4.14% |
| Trailing P/E | 79.97 | 23.75 | 56.09 |
| Below 52-week high | 34.4% | 23.7% | 20.5% |
ServiceNow was at the forefront of the recovery in enterprise software stocks. Salesforce NYSE:CRM advanced 4.7%, with Workday NASDAQ:WDAY up 4.1%. However, ServiceNow continued to trade the most below its yearly peak.
The valuation remains high. ServiceNow’s trailing multiple stood near 80 times earnings, over triple the multiple seen at Salesforce.
Growth is driving the debate
| Q2 2026 operating measure | Reported | Year-on-year change |
|---|---|---|
| Subscription revenue | $3.877 billion | +24.5% |
| Total revenue | $3.987 billion | +24.0% |
| Current RPO | $13.20 billion | +21.0% |
| Total RPO | $29.0 billion | +21.0% |
| AI annual contract value | Over $1 billion | Not disclosed |
The recovery is reflected in the operating data. Subscription revenue climbed 24.5% during the second quarter. Current remaining performance obligations were up 21%.
ServiceNow recorded 123 new net deals exceeding $1 million in annual contract value, an increase of almost 40%. The number of customers with contracts above $5 million rose to 658, reflecting growth of about 23%.
Chief Executive Bill McDermott stated, “Agentic deployments of ServiceNow AI increased ninefold in just nine months.” ServiceNow’s AI offerings have now reached over $1 billion in annual contract value. ServiceNow newsroom
Q2 outlook growth eases
| Company outlook | Guidance | Growth or margin |
|---|---|---|
| Q3 subscription sales | $3.975–$3.980 billion | +20.5% |
| Q3 cRPO expansion | — | +19.5% |
| FY2026 subscription sales | $15.760–$15.780 billion | +22.5% |
| FY2026 operating profit margin | — | 31.5% non-GAAP |
| FY2026 free-cash-flow ratio | — | 35% non-GAAP |
Management projects subscription growth of 20.5% for the third quarter, below the 24.5% rate seen in the second quarter. The company additionally guided to cRPO growth of 19.5%.
The company’s second-quarter outperformance was partly driven by federal on-premise revenue recognized earlier than expected, moving from Q3 into Q2. Reuters noted that the company guided Q3 subscription revenue at $3.975 billion to $3.980 billion, under the analyst consensus of about $4 billion.
Analysts united on growth outlook, split on value
| Analyst | Rating | Target | Implied move | Date |
|---|---|---|---|---|
| Tal Liani, Bank of America | Buy | $150 | +17.4% | Aug. 19 |
| Michael Turrin, Wells Fargo | Buy | $175 | +37.0% | Aug. 12 |
| Karl Keirstead, UBS | Hold | $110 | -13.9% | July 23 |
| Jackson Ader, KeyBanc | Sell | $85 | -33.5% | July 23 |
| 30-analyst average | 27 Buy / 1 Hold / 2 Sell | $141 | +10.4% | Latest available |
The spread is exceptionally broad. Forecasts range from $72 to $248. This difference illustrates the open question: will AI enhance ServiceNow’s control layer, or will it undermine established software pricing models?
UBS previously downgraded the stock, citing strain on non-AI software spending and the impact of custom AI-driven processes. The firm’s next $110 price target suggests further declines. In contrast, Bank of America’s updated target reflects a more optimistic outlook.
Risks: Second-quarter results were boosted by the timing of federal revenue, and a stronger U.S. dollar is expected to pose a roughly $35 million headwind to Q3 cRPO. The company’s earnings multiple, near 80 times, provides limited protection against any deceleration in AI monetisation or renewal growth.
The upcoming focus is execution. Should cRPO remain around 20% and margins remain stable, the recovery is backed by fundamentals. If either figure falls, Wednesday’s advance could have exhausted the straightforward upside.
Related articles: NYSE:NOW
ServiceNow’s rebound meets a valuation test
Market data: August 19, 2026, 13:35:22 EDT · USD · U.S. market open
Where the price sits
52-week range$127.75
The stock has recovered 57% from its annual low, yet remains one-third below its high. The easy “oversold” argument is fading.
Analyst vote
Past three monthsContract engine
Q2 2026 growthBacklog growth remains above 20%. AI annual contract value crossed $1 billion.
Guidance bridge
Company outlookThe Q3 growth step-down is the next test. Federal on-premise revenue pulled forward into Q2 helped the prior beat.
Target range: conviction is high, agreement is low
USD per sharePeer pulse
August 19 intraday| Company | Day | P/E | Below high |
|---|---|---|---|
| ServiceNow | +6.91% | 79.97× | −34.4% |
| Salesforce | +4.69% | 23.75× | −23.7% |
| Workday | +4.14% | 56.09× | −20.5% |
