ServiceNow NOW is benefiting from accelerating adoption and monetization of its agentic artificial intelligence (AI) portfolio as enterprises increasingly automate complex workflows across IT, customer service, employee services and security. This momentum is strengthening NOW’s position in enterprise AI and enhancing its competitive standing against Microsoft MSFT and Salesforce CRM. ServiceNow AI annual contract value (ACV) crossed $1 billion in the second quarter of 2026, while AI net new ACV increased more than 40% sequentially. Management remains on track to exceed its $1.5 billion AI ACV target by the end of 2026.
Agentic AI deployment is broadening rapidly across ServiceNow’s installed base. The number of customers running Agentic AI in production increased ninefold over the past nine months, while the percentage of renewal customers purchasing Agentic AI for the first time doubled both sequentially and year over year. Deals incorporating five or more ServiceNow AI products grew 5.5 times year over year, resulting in a tripling of $1 million-plus AI deals. The company is already tracking ahead of its long-term target for AI to contribute 30% of ACV by 2030, strengthening visibility into future consumption growth.
Monetization is benefiting from new AI-native Stock Keeping Units (SKUs) and a broader pricing model. Deal volume among first-time Agentic AI buyers increased more than 45% year over year, while upgrades to new AI-native SKUs are generating price uplifts within ServiceNow’s targeted 20-30% framework. ServiceNow noted that 50% of net new business is already non-seat-based, reducing dependence on traditional seat expansion as autonomous agents become more prevalent. The company is preparing additional AI-native offerings, including a conversational service-desk experience with no tickets and AI-coded automation, which management said could expand its total addressable market.
The company is demonstrating tangible productivity and cross-selling benefits from autonomous AI. In the second quarter of 2026, more than 40 customers were using Level 1 Information Technology Service Management (ITSM) AI specialists, which were resolving roughly 80-85% of service requests without human interaction, with some requests falling from two days to about 20 minutes. AI adoption is driving demand for adjacent products. EmployeeWorks deal volume increased more than 150% quarter over quarter, RaptorDB Pro deal volume rose 80% year over year, and Workflow Data Fabric appeared in 17 of NOW’s top 20 deals. AI Control Tower, Otto, Autonomous Workforce, Context Engine and Action Fabric further extend governance, orchestration and autonomous actions across enterprise workflows.
NOW Faces Tough Competition
Microsoft and Salesforce are intensifying competitive pressure. Microsoft reported its fourth-quarter fiscal 2026 results on July 29, 2026, highlighting more than 100,000 Foundry customers and nearly 40 million agents registered through Agent 365 across tens of thousands of companies. Microsoft 365 Copilot exceeded 30 million paid seats, while the company is shifting toward seat-plus-consumption pricing. Usage-based customer-service credit consumption increased fourfold sequentially, while GitHub Copilot revenues accelerated more than 60% quarter over quarter.
Salesforce is similarly strengthening Agentforce. In its second-quarter fiscal 2027 results reported on Aug. 26, 2026, Agentforce ARR exceeded $1.5 billion, while Agentforce and Data 360 ARR reached nearly $3.9 billion. Salesforce is expanding AI monetization through premium SKUs and consumption-based offerings. Separately, on Feb. 26, 2026, Salesforce said more than 180 organizations had selected Agentforce IT Service, highlighting the growing competitive pressure on ServiceNow in IT service workflows.
NOW’s Share Price Performance, Valuation & Estimates
Shares of ServiceNow have declined 17.9% year to date against the broader Zacks Computer and Technology sector’s 15.4% growth.
NOW’s Stock Price Performance
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NOW shares are trading at a premium, with a forward 12-month price/earnings ratio of 26.98X compared with the broader sector’s 20.82X. ServiceNow has a Value Score of D.
NOW’s Valuation
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The Zacks Consensus Estimate for NOW’s 2026 earnings is currently pegged at $1.03 per share, unchanged over the past 30 days, suggesting 7.29% year-over-year growth.
ServiceNow, Inc. Price and Consensus
ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote
ServiceNow currently carries a Zacks Rank #4 (Sell).
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This article originally published on Zacks Investment Research (zacks.com).