- Post-Earnings Spike: ServiceNow stock closed around $911.70 on Oct. 29 (down ~2.8% for the day) and then jumped 3–5% in after-hours trading into the mid-$900s after a strong earnings release [1]. By midday Oct. 30, shares traded near $950 (~+4%) [2], signaling a sharp rally on the news.
- Blowout Q3 Results:Q3 2025 (Sept. quarter) beat expectations – subscription revenue was $3.30 billion (+21.5% YoY, vs ~$3.26B expected) and total revenue hit $3.41 billion (+22% YoY) [3] [4]. Adjusted earnings of $4.82 per share trounced forecasts of ~$4.27 [5] [6]. The company raised its full-year subscription sales outlook slightly to ~$12.84–12.85B (vs $12.78–12.80B prior) [7], citing robust demand for its AI-powered workflow software. CEO Bill McDermott touted ServiceNow as “the AI platform for business transformation,” noting surging enterprise interest in AI-driven workflow automation [8].
- 5-for-1 Stock Split: Alongside earnings, ServiceNow’s board approved a 5-for-1 stock split (pending shareholder approval in December) [9]. This move – which will split each share into five – aims to make the high-priced stock more affordable to investors [10]. Stock splits often bolster demand by letting smaller investors buy in more easily, and the announcement was seen as a vote of confidence by the company’s leadership.
- Analyst Upgrades & Targets: Wall Street is broadly bullish on NOW. 46 out of 47 analysts rate it a Buy or Strong Buy, per one survey [11]. The consensus 12-month price target is ~$1,100–1,150 (about 20% above current levels) [12]. Top analysts have issued targets up to $1,250–$1,300 [13]. For example, Morgan Stanley recently upgraded ServiceNow to “Overweight” with a $1,250 target, saying investors had been “missing the forest for the trees” on the company’s potential to sustain ~20% growth [14]. Oppenheimer likewise called the stock’s earlier dip a “unique opportunity” to buy a high-quality business [15].
- AI Boom Lifts Demand: ServiceNow is riding powerful tech tailwinds. Enterprises are rapidly adopting AI-powered software to automate IT services and business processes [16] [17]. ServiceNow’s platform – used by ~85% of Fortune 500 companies – is positioned to benefit as corporate cloud and AI budgets expand. The company’s ~21% growth rate is outpacing many peers: for context, cloud CRM giant Salesforce is growing in the low double digits and plans to invest $15B in AI as it aims for $60B revenue by 2030 [18] [19], while HR software leader Workday projects ~17% growth this year [20]. Valuation is a talking point: ServiceNow trades around 45× forward earnings, higher than most large-cap peers (e.g. ~19× for Salesforce) [21]. Bulls argue its consistent ~20% growth and expanding margins justify the premium [22], especially given its aggressive AI push.
Stock Soars on Earnings News
ServiceNow’s stock has been volatile in late 2025, but the Q3 report sparked a strong rebound. Shares had pulled back from an all-time high of ~$1,198 earlier in the year amid investor caution [23]. On October 29 (the earnings release day), NOW fell nearly 3% during regular trading to $911.70 [24]. However, after results came out post-market, buyers rushed in – the stock leapt about 4% in after-hours trading, rising into the mid-$900s [25]. By the next day (Oct. 30), NOW was up around 4–5% from its pre-earnings price, hovering in the mid-$950s [26]. This company-specific jump stood out because overall market indexes were flat to slightly positive (the tech-heavy Nasdaq was only +0.3% by late Oct. 29) [27], underscoring that ServiceNow’s surge was driven by its own news rather than a broader market rally.
This pop put ServiceNow on a path to narrow its 2025 losses. Prior to earnings, the stock was down roughly 12–15% year-to-date [28], underperforming the broader tech sector. (The S&P 500 tech index had notched modest gains in 2025, while high-valuation software names like ServiceNow lagged on macroeconomic worries.) Analysts note that concerns over U.S. federal IT budgets and high valuations had weighed on ServiceNow shares in recent months [29]. Those fears appear to have eased with the latest results: management’s upbeat guidance on AI-driven demand and the goodwill gesture of a stock split helped renew investors’ confidence [30]. “The October rally implies those concerns eased with the new data,” a TS2.tech report observed, as the strong earnings and AI momentum provided fresh catalysts for the stock [31].
Q3 Earnings Beat Expectations, Guidance Raised
The third-quarter FY2025 earnings proved to be a blockbuster for ServiceNow. Revenue jumped over 22% year-over-year to $3.407 billion [32], handily beating Wall Street’s ~$3.35B estimate. Importantly, subscription revenue (a key metric for this SaaS company) grew 21.5% YoY to $3.299 billion [33], slightly above forecasts [34]. This marks an acceleration driven by robust enterprise demand. Profitability also impressed: adjusted earnings were $4.82 per share, topping consensus (~$4.27) by a wide margin [35] [36]. It was ServiceNow’s fifth consecutive quarterly beat, reflecting what CEO Bill McDermott called “elite level execution” in meeting customer needs in the AI era [37].
Buoyed by the strong quarter, ServiceNow inched up its full-year outlook. The company raised its 2025 subscription revenue forecast to about $12.84–$12.85 billion, slightly above the prior range ( ~$12.78–$12.80B ) [38]. While the guidance bump was modest, it came in ahead of analysts’ expectations (consensus was ~$12.79B) [39], signaling management’s confidence. Executives highlighted that backlog of business (remaining performance obligations) is up ~21% from a year ago – a positive indicator of future revenue in the pipeline [40].
“Every enterprise is focused on AI,” CEO McDermott noted on the earnings call, reiterating ServiceNow’s vision as “the AI platform for business transformation.” [41] He emphasized that surging interest in AI-powered workflow automation is driving demand across IT services, customer service, and other business processes. In fact, ServiceNow’s new AI features (such as its Now Assist generative AI suite) and workflow tools are seeing rapid uptake, contributing to the sales beat. The company also cited strong growth in large deals – for instance, it closed 89 contracts over $1 million in Q3 – as clients expand their commitments to the platform [42] [43].
Alongside the earnings, ServiceNow announced a headline-grabbing 5-for-1 stock split. The board approved the plan, which will split each share of NOW into five shares (reducing the price per share by 80% accordingly) [44]. Shareholders will vote to authorize the split in December, but investors are already cheering the move. Such splits don’t change the company’s market value, but they lower the price of each share, making it easier for retail investors to buy round lots. The move is seen as shareholder-friendly and often a sign of confidence from management. Coming on the heels of the earnings beat, the split news added fuel to the rally – analysts say it could broaden ServiceNow’s ownership base and improve liquidity [45]. Notably, this is ServiceNow’s first ever stock split, and it reflects how far the stock has climbed (trading near $1,000 pre-split). High-priced peers like Amazon and Tesla have done similar multi-split moves in recent years to make their shares more accessible.
Wall Street’s Take: “Strong Buy” Ratings and Higher Targets
Analysts reacted enthusiastically to ServiceNow’s results and guidance. The stock already enjoyed a consensus Strong Buy rating ahead of earnings, and that positive sentiment remains intact or even stronger [46]. Dozens of analysts have published updates maintaining bullish stances. According to TS2 and Directorstalk research, 41 out of 46 analysts covering NOW rate it a Buy/Outperform, with only 1 Sell on record [47] – a remarkably high approval ratio. The average 12-month price target now sits around $1,117 per share [48], implying roughly 20-25% upside from the current stock price. Many analysts are lifting their targets in the wake of the earnings beat and AI momentum.
Several big-name firms see even greater upside. For instance, JMP Securities reiterated a $1,300 target, one of the highest on the Street [49]. Stifel and Oppenheimer both maintain targets in the $1,150–$1,200 range and argue that ServiceNow’s growth story warrants a premium valuation [50]. “We view ServiceNow as a unique asset – a platform company with growth and margin at scale,” an Oppenheimer analyst said, calling the recent pullback a “unique opportunity” for investors to accumulate shares [51].
Even previously cautious analysts are coming around. Morgan Stanley, which had been on the sidelines, upgraded NOW to Overweight (Buy) in late September with a $1,250 target [52]. Morgan Stanley’s team argued that the market was “missing the forest for the trees” [53] – focusing too much on short-term IT spending fears and not enough on ServiceNow’s long-term 20% growth trajectory and expanding role in enterprise AI. That upgrade has proven timely, as the stock is already climbing in that direction. On the flip side, a few holdouts remain: for example, Guggenheim Securities trimmed its target to ~$640 (well below the market price) on concerns that the AI adoption cycle might take longer than bulls hope [54]. And UBS recently lowered its target to $1,075 (while still rating NOW a Buy) after some channel checks pointed to mixed customer feedback on early AI features [55]. However, these cautious views are clearly in the minority. The broad takeaway on Wall Street is that ServiceNow’s fundamentals are strong, and its strategy to embed AI across its product line is positioning the company for sustained double-digit growth.
In their research notes, analysts are highlighting ServiceNow’s robust fundamentals: the company now has over 8,400 enterprise customers with a stellar ~98% subscription renewal rate [56] – indicating sticky demand. Its 21–22% revenue growth far exceeds most large-cap software peers, and importantly, margins are improving as it scales. The firm’s adjusted operating margins and free cash flow have been on an upward trend, even as it invests heavily in AI R&D and strategic acquisitions. “NOW is well positioned to deliver generative AI capabilities at enterprise scale,” wrote Morgan Stanley, noting that ServiceNow’s early moves (like the Now Assist AI suite and the pending Moveworks acquisition) give it an edge in bringing AI to workflow automation [57]. With such growth drivers in mind, many analysts have reaffirmed bullish outlooks, expecting ServiceNow to continue compounding revenue ~20% annually into 2026 and beyond [58].
How ServiceNow Stacks Up to Peers (Salesforce, Workday, etc.)
ServiceNow operates in the competitive arena of enterprise cloud software, where it often draws comparisons to other industry leaders like Salesforce and Workday. In many respects, ServiceNow’s growth stands out. The company’s ~21% revenue increase this quarter is faster than most peers of similar size [59]. For example, Salesforce (CRM) – the cloud CRM titan roughly 4× ServiceNow’s revenue size – is currently growing around 11–12% annually (Salesforce expects about 11% revenue growth in its current fiscal year) and has guided for long-term growth in the mid-teens [60]. Salesforce’s stock has also struggled in 2025 (down roughly 20–30% year-to-date as of October) [61], reflecting investor concerns about its pace of AI monetization and macro headwinds. By contrast, ServiceNow’s stock, while down about 10% YTD before earnings, has been relatively more resilient and is now rebounding on its strong results.
Another peer, Workday (WDAY) – a leader in cloud HR and finance software – is also heavily investing in AI to enhance its platform, but its growth is in the mid-teens. Workday recently projected about 17% subscription revenue growth for its current fiscal year [62], a healthy clip but still a few points below ServiceNow’s ~20%+ trajectory. Workday’s focus on HR and ERP software means it operates in slightly different segments, yet all these enterprise SaaS firms are chasing the same opportunity: helping organizations automate and streamline operations with cloud-based, AI-infused solutions.
In terms of financial profile, ServiceNow does carry a higher valuation than many peers. Its forward price-to-earnings ratio (P/E) is around 45× [63], versus ~33× for Microsoft and only ~19× for Salesforce [64]. This indicates investors are pricing in a robust growth premium for NOW. Bulls argue that ServiceNow merits this premium given its superior growth rate and expanding profitability [65] – the company has been steadily increasing its operating margins, and its rule-of-40 (growth plus profit margin) is one of the strongest among cloud software companies. Optimists also point out that ServiceNow’s products are deeply entrenched (the platform is used by roughly 85% of Fortune 500 companies) [66], which gives it a wide competitive moat and high switching costs. Meanwhile, peers like Salesforce are pursuing aggressive AI moves of their own – Salesforce is spending $8 billion to acquire data management firm Informatica and committing $15B in its home base of San Francisco to boost AI development [67] [68]. These initiatives show that the race to capitalize on enterprise AI is industry-wide. But for now, ServiceNow’s ability to consistently grow ~20% at a ~$13B revenue scale is viewed as a differentiator in the group. As one tech analyst put it, ServiceNow is “growing faster than many large-cap software peers, albeit at a higher valuation” [69], encapsulating the risk-reward tradeoff investors see compared to names like Salesforce, Workday, or other cloud incumbents.
Broader Market Context and Macroeconomic Influences
The backdrop for ServiceNow’s performance includes both favorable tech trends and broader economic headwinds. On the positive side, 2025 has seen an AI investment boom that lifted many technology stocks. Companies across industries are pouring money into AI-driven tools, which benefits software providers that can meet that demand. Enterprise IT spending is projected to rise at a healthy clip – Gartner, for instance, forecasts global IT budgets to grow around 8%+ in 2025 as digital transformation initiatives remain a priority [70]. ServiceNow’s focus on AI-powered workflows plays directly into this trend. Reuters noted that many enterprise clients are turning to AI software from firms like ServiceNow and Salesforce to manage IT services and automate operations in order to save costs and boost efficiency [71] [72]. This broader adoption of cloud and AI solutions provides a tailwind for ServiceNow’s business model.
That said, macroeconomic factors have at times tempered enthusiasm for high-growth software stocks this year. Rising interest rates and inflation concerns have made investors more cautious on richly valued tech names, since higher rates reduce the present value of future earnings. In late September, Federal Reserve commentary about “stretched valuations” in parts of the market contributed to volatility in tech shares [73]. ServiceNow was not immune – as noted, its stock underperformed earlier in 2025 amid worries about its valuation (P/E over 40) and specific issues like a potential slowdown in U.S. federal IT spending [74]. Approximately 10% of ServiceNow’s revenue comes from government clients, so debates over federal budgets (and even the temporary government shutdown risk this fall) weighed on sentiment. The company proactively addressed this by offering steep discounts through its “OneGov” program to spur public-sector demand [75], and management indicated that government deals remain on track.
Heading into year-end, the market environment for ServiceNow looks more supportive. The Nasdaq and S&P 500 tech indices are up for the year (albeit modestly), and with the latest earnings season showing strong results for many software firms, investors appear willing to rotate back into growth stories that deliver. ServiceNow’s October surprise – strong earnings plus the stock split – has positioned it as one of the noteworthy comeback stories in tech this quarter. The company’s own outlook for next year is upbeat: consensus forecasts project ServiceNow’s revenue will reach about $13.3 billion in 2025 (+21% YoY) and ~$15.8B in 2026 (+18.6% YoY) [76], and analysts see its adjusted earnings climbing to ~$17–20 per share over the next two years if current trends hold. These figures assume that macro conditions remain reasonably stable and that IT spending stays robust even if economic growth moderates.
In summary, ServiceNow’s recent news paints a positive picture despite broader economic uncertainties. The combination of a solid quarterly beat, an AI-focused growth strategy, and an investor-friendly stock split has many experts feeling optimistic about the company’s medium-term prospects. Of course, execution will be key – the company must continue innovating (e.g. integrating acquisitions like the pending $2.85B Moveworks deal [77] [78]) and prove that its AI investments can drive efficiency for customers. But for now, the consensus is that ServiceNow’s AI-driven momentum is real and could power further gains. As long as enterprises keep digitizing and automating workflows, ServiceNow appears poised to ride that wave. “ServiceNow’s AI strategy is hitting its stride, and it’s translating into record growth,” summarized a TS2.tech analysis, which noted that most forecasters now expect double-digit stock upside over the next year on the back of these trends [79] [80].
Sources: Official company press release and earnings call statements; TS² TechStock financial news [81] [82]; Reuters and Yahoo Finance reports [83] [84]; analyst commentary via Investing.com, Zacks, and StockAnalysis [85] [86]. All information is up to date as of Oct. 30, 2025.
References
1. ts2.tech, 2. stockanalysis.com, 3. ts2.tech, 4. www.reuters.com, 5. ts2.tech, 6. www.reuters.com, 7. www.reuters.com, 8. ts2.tech, 9. ts2.tech, 10. ts2.tech, 11. ts2.tech, 12. ts2.tech, 13. ts2.tech, 14. ts2.tech, 15. ts2.tech, 16. ts2.tech, 17. www.reuters.com, 18. www.reuters.com, 19. www.reuters.com, 20. investor.workday.com, 21. ts2.tech, 22. ts2.tech, 23. ts2.tech, 24. ts2.tech, 25. ts2.tech, 26. stockanalysis.com, 27. ts2.tech, 28. ts2.tech, 29. ts2.tech, 30. ts2.tech, 31. ts2.tech, 32. ts2.tech, 33. ts2.tech, 34. www.reuters.com, 35. ts2.tech, 36. www.reuters.com, 37. ts2.tech, 38. www.reuters.com, 39. www.reuters.com, 40. ts2.tech, 41. ts2.tech, 42. www.nasdaq.com, 43. www.nasdaq.com, 44. ts2.tech, 45. ts2.tech, 46. ts2.tech, 47. ts2.tech, 48. ts2.tech, 49. ts2.tech, 50. ts2.tech, 51. ts2.tech, 52. ts2.tech, 53. ts2.tech, 54. ts2.tech, 55. ts2.tech, 56. ts2.tech, 57. ts2.tech, 58. ts2.tech, 59. ts2.tech, 60. www.reuters.com, 61. www.reuters.com, 62. investor.workday.com, 63. ts2.tech, 64. ts2.tech, 65. ts2.tech, 66. ts2.tech, 67. www.reuters.com, 68. www.reuters.com, 69. ts2.tech, 70. ts2.tech, 71. www.reuters.com, 72. www.reuters.com, 73. www.reuters.com, 74. ts2.tech, 75. ts2.tech, 76. ts2.tech, 77. ts2.tech, 78. www.reuters.com, 79. ts2.tech, 80. ts2.tech, 81. ts2.tech, 82. ts2.tech, 83. www.reuters.com, 84. www.reuters.com, 85. ts2.tech, 86. ts2.tech