ServiceNow's Growth Story Hinges on AI Monetization as Analyst Optimism Jostles with Market Caution

ServiceNow CFO to address AI revenue conversion at Jefferies conference; stock trades at $100 vs $130 target amid strong Q1 growth and Now Assist customer surge.

When Oppenheimer analysts surveyed 64 ServiceNow customers in May, the message was clear: enterprises continue to prioritize spending on artificial intelligence, IT operations, risk management and security. The findings reinforced the firm's conviction in a stronger second half of 2026 and a potential business acceleration into 2027, prompting it to reaffirm an Outperform rating with a $130 price target. Yet the stock is trading at barely $100, leaving a roughly 30% gap between Wall Street’s aspiration and the market’s current reality.

That disconnect is exactly the kind of tension Finance Chief Gina Mastantuono will face this afternoon when she takes the virtual stage at Jefferies’ Software, Internet & AI Conference. The fireside chat, streaming from 12:30 p.m. Pacific Time, offers investors a rare opportunity to square the company’s quarterly performance against its latest strategic priorities — especially the pace at which AI products are converting into recognizable revenue.

ServiceNow’s first-quarter 2026 results, released on April 22, provided a solid foundation. Subscription revenue climbed 22% year-over-year to $3.671 billion, pushing total revenue to $3.770 billion. The company’s current remaining performance obligations, a key gauge of near-term contracted business, expanded 22.5% to $12.64 billion, while long-term RPO hit $27.7 billion — up 25%. Management guided for second-quarter subscription revenue of $3.815 billion to $3.820 billion and a full-year 2026 range of $15.735 billion to $15.775 billion, representing 22% to 22.5% growth.

The AI monetization narrative is gaining traction. ServiceNow disclosed that the number of customers with annual contract value exceeding $1 million for its Now Assist AI product surged more than 130% in the first quarter. The company also recorded 16 new-business transactions worth over $5 million each, and the total count of customers above that threshold reached 630, a 22% increase. BofA analyst Tal Liani reinforced the bullish case on Monday, calling ServiceNow a top buy and contrasting it sharply with Salesforce, which he rated Underperform. Liani argued that ServiceNow’s platform serves as essential infrastructure for routing, governance and auditing enterprise data, positioning it as a winner of the AI transformation rather than a traditional SaaS vendor.

Nevertheless, the stock remains under pressure, sliding $2.15 to $99.92 on the day and carrying a market capitalization of roughly $104 billion. The average analyst price target stands at $141.85 with a consensus of Moderate Buy, but the wide spread between that target and the current trading level suggests the market is pricing in significant risks. Chief among them is the open question of whether AI will disrupt the traditional SaaS business model — and whether ServiceNow can translate the technology’s promise into durable top-line growth.

The company itself has acknowledged headwinds. Geopolitical tensions in the Middle East delayed several large on-premise deals in the first quarter, shaving roughly 75 basis points off subscription revenue growth. That admission, combined with the broader sector’s ongoing revaluation, has kept a lid on the share price even as fundamentals improve.

To backstop investor confidence, ServiceNow has been aggressively repurchasing its own shares. During the first quarter, it bought back approximately 20.1 million shares, including 18.5 million through a $2 billion accelerated stock repurchase program. As of March 31, $4.2 billion remained under the buyback authorization — a clear signal from management that it sees value in its own equity.

With no new guidance expected from the Jefferies appearance, the spotlight falls squarely on Mastantuono’s ability to reinforce the outlook for subscription growth, AI momentum and operating margin discipline. The market is waiting for a signal that the current plan holds together and that operational efficiency won’t buckle under the weight of expansion. For now, ServiceNow sits in the crosshairs of analyst conviction and investor skepticism, with the AI thesis as the only force that can close the gap.