ServiceNow stock earnings lift shares as AI pipeline tops $1 billion
ServiceNow shares rose after a second-quarter beat, with AI contract value above $1 billion and cybersecurity gaining traction.
By Sal Moretti · Money Reporter
3 min read
ServiceNow stock earnings gave software investors a rare green patch Thursday, as the company’s shares climbed 2% in recent morning trading after a second-quarter beat and fresh signs that its AI push is pulling in serious demand, according to MarketWatch.
The move stood out on a rough morning for tech. MarketWatch reported that the S&P 500 was down more than 1%, while the Nasdaq Composite, heavy with technology names, was off 2.4% as investors weighed earnings from Alphabet and Tesla.
ServiceNow reported second-quarter subscription revenue of $3.88 billion, up 25% from a year earlier. The bigger attention grabber was current remaining performance obligations, known as cRPO, which rose 21% to $13.2 billion.
Why is ServiceNow stock up today?
Investors focused on ServiceNow’s AI demand pipeline after the company said its AI annual contract value has moved above $1 billion. MarketWatch reported that this puts ServiceNow ahead of the pace needed to reach its year-end target of $1.5 billion.
That mattered because ServiceNow shares have been pressured this year by concern that artificial intelligence could disrupt software companies. Thursday’s report gave Wall Street evidence that ServiceNow may be selling into the AI boom rather than getting flattened by it.
Jay Woods, chief market strategist at Freedom Capital Markets, wrote in a Thursday note that ServiceNow’s quarter came as a relief. He added that the stock could see another 10% relief rally on top of the morning’s gains.
What is cRPO at ServiceNow?
Current remaining performance obligations are revenue that a company expects to recognize over the next 12 months from contracts already in place. For ServiceNow, the 21% increase to $13.2 billion signaled a stronger near-term book of business.
The company’s AI Control Tower is built to help businesses monitor and govern AI agents across different environments. On the earnings call, Chief Executive Bill McDermott said enterprises need “one govern layer of record for work,” regardless of which chipmaker, AI lab or pricing model wins out.
Bank of America analyst Tal Liani wrote Thursday that the quality of ServiceNow’s AI products is improving. According to Liani, the company is moving beyond basic repetitive AI tasks toward wider agentic workflows that use ServiceNow’s workflow history, configuration-management database context and new Knowledge Specialists.
Liani also pointed to ServiceNow’s role as an enterprise system of record, meaning the company serves as an official data source inside businesses. He wrote that this gives ServiceNow a strategic edge over outside AI tools that must pull data from different systems, interpret it and then send it back.
Cybersecurity deals add another tailwind
ServiceNow’s cybersecurity business also drew investor attention. The company bought cybersecurity firms Armis and Veza over the past year to strengthen its security and risk platform, deals that MarketWatch said drew criticism at the time because of their cost.
Jefferies analyst Samad Samana wrote Thursday that cybersecurity has become a growth driver for ServiceNow. He said customers are using AI Control Tower to manage cybersecurity work, and that security and risk appeared in 16 of the company’s top 20 deals during the quarter.
Samana wrote that ServiceNow enters the second half with healthy momentum and a reasonable valuation, a setup he said should support a stock rally.
This story draws on original reporting from MarketWatch.