ServiceNow's AI revenue is projected to exceed $1.5 billion by 2026.
Around half of new contracts are now consumption-based.
This shift may fuel growth, not disruption.
What happened
ServiceNow's AI revenue is expected to surpass $1.5 billion by the end of 2026 and reach about $9.6 billion in 2030. The company is trading at 25.4x forward 2027 earnings, below its valuation peak of over 60x earnings in late 2024.
Why it matters
About 50% of net new ACVs (annual contract values) are already priced on consumption rather than seats. This undermines the SaaS-pocalypse narrative that had pushed the stock to multi-year lows, suggesting the new pricing model may drive growth instead of disruption.
What to watch
The analyst expects consumption-based pricing to unleash a new era of growth. The author bought shares on April 10th at $82.44, with an average cost basis of $103.30.
Ask the AI about this article →
The article argues that the shift to consumption-based pricing is a positive catalyst for ServiceNow. The author notes that about half of net new ACVs are already priced this way, which directly counters the SaaS-pocalypse narrative that had driven the stock to multi-year lows. Instead of disrupting the business, the author expects this new framework to unleash a new era of growth, as seen in the projected AI revenue figures.
The valuation context is also key: ServiceNow trades at 25.4x forward 2027 earnings, well below its peak of over 60x in late 2024. The author, who owns shares with an average cost of $103.30, expresses regret for not making a larger position, suggesting confidence in the company's trajectory. This commentary reflects a bullish view, grounded in the specific numbers and expectations laid out in the article.
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