Going into Wednesday's earnings release, NOW shares had shed nearly 38% year-to-date, hammered by fears that enterprise software spending was softening and that AI might disrupt the whole category. Then the numbers landed, and the stock jumped 5.5% in pre-market Thursday before settling at roughly 2% gains during the regular session, trading around $100.67 at the peak.

Revenue for the second quarter came in at $3.98 $3.99 billion, a 24% year-over-year increase and comfortably above the Wall Street consensus of $3.93 billion. Non-GAAP EPS printed at $0.90, beating analyst estimates that had clustered in the $0.85 $0.86 range. CEO Bill McDermott called the quarter exceptional, saying the results "solidify our position as the fastest-growing major enterprise software and cybersecurity company." Bold claim, but the numbers back it up, at least for this quarter.

AI Contract Target Jumps 50% to $1.5 Billion

The headline that caught most eyes wasn't the revenue beat. ServiceNow lifted its 2026 AI annual contract value target by 50%, raising it to $1.5 billion from $1 billion, pointing to customer adoption running ahead of internal expectations. For a company whose stock had been pricing in a bleaker scenario, that revision lands with real weight. The broader question for the sector, including how America's largest cloud firms are managing AI-related capital intensity, makes this kind of forward commitment from ServiceNow stand out.

For Q3, management guided subscription revenue to $3.975 $3.98 billion, implying roughly 20.5% year-over-year growth, with current remaining performance obligations expanding around 19.5%. The guidance raise was there, but it was measured rather than aggressive.

Wall Street Stays Constructive but Not Uncritical

J.P. Morgan's Mark Murphy kept his Overweight rating while flagging what he called an "odd lull" in organic constant-currency cRPO growth as an unresolved concern. His price target sits at $145, which implies roughly 49% upside from recent levels. Murphy also noted the conservative tone of the guidance lift could prompt investors to ask why AI momentum isn't showing up more visibly in the forward numbers. He expects management to address that at the upcoming Financial Analyst Day.

The contrast with other enterprise software stories this season is worth noting. Oracle's stock lost half its value in ten months as its own growth narrative stalled, which gives ServiceNow's 24% revenue growth a sharper edge by comparison. The stock still has a long road back from its year-to-date lows, but the Q2 print at least restarted the debate about where the floor actually is.

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