How much revenue is ServiceNow's AI product generating?

Now Assist, ServiceNow's generative AI suite, is tracking toward about $1.5 billion（約2400億円） in annual contract value for 2026, which exceeds management's original $1 billion（約1600億円） target. Customers spending more than $1 million（約1.6億円） a year on Now Assist grew more than 130% year over year.

What changed to ease the AI disruption fears that drove the stock down?

ServiceNow's results showed AI is boosting rather than replacing software demand, and the company has shifted about half of its net new business to consumption-based pricing models tied to usage rather than user seats. In late June, the White House reportedly asked OpenAI to limit its most powerful model to a small group of vetted partners, cooling fears that frontier AI would instantly commoditize enterprise software.

Is ServiceNow's stock cheap now?

No. The stock trades at a forward price-to-earnings ratio of about 24 and a price-to-sales ratio of about 7. While both have compressed sharply from earlier in the year, neither is a bargain for a business whose growth, while strong, is gradually slowing from high-20s rates of a few years ago.

Yahoo Finance AIJul 2, 2026Jul 2, 2026, 10:01 JST

ServiceNow Stock Rebounds as AI Fears Ease, but Valuation Remains Steep

Send on LINE

3 Key Points

What happened
ServiceNow shares have climbed nearly 30% off their 2026 low after falling about 50% from a $211.48 peak amid market fears that AI would disrupt enterprise software. The company's first-quarter 2026 results showed subscription revenue rising 22% year over year to $3.67 billion（約5900億円）, and its Now Assist AI suite is tracking toward about $1.5 billion（約2400億円） in annual contract value for 2026.
Why it matters
Investors had feared AI agents would let customers replace expensive software subscriptions, but ServiceNow's results suggest the opposite is happening—AI is driving revenue growth, not cannibalizing it. About half of ServiceNow's net new business now comes from consumption-based pricing (tokens, infrastructure, connectors) rather than per-user seats, so more automation could mean higher platform usage, not lower demand.
What to watch
ServiceNow trades at a forward price-to-earnings ratio of about 24 and a price-to-sales ratio of about 7—compressed but not yet a bargain for a business whose growth, while strong, is gradually slowing from high-20s rates a few years ago. Management guided for full-year 2026 subscription revenue of about $15.75 billion（約2.5兆円）, up more than 20%.

Not sure about something? Ask the AI

Questions and answers are published on this page.

Summaries like this, in your inbox every morning.

Get news like this every morning, free

FAQ

How much revenue is ServiceNow's AI product generating?: Now Assist, ServiceNow's generative AI suite, is tracking toward about $1.5 billion（約2400億円） in annual contract value for 2026, which exceeds management's original $1 billion（約1600億円） target. Customers spending more than $1 million（約1.6億円） a year on Now Assist grew more than 130% year over year.
What changed to ease the AI disruption fears that drove the stock down?: ServiceNow's results showed AI is boosting rather than replacing software demand, and the company has shifted about half of its net new business to consumption-based pricing models tied to usage rather than user seats. In late June, the White House reportedly asked OpenAI to limit its most powerful model to a small group of vetted partners, cooling fears that frontier AI would instantly commoditize enterprise software.
Is ServiceNow's stock cheap now?: No. The stock trades at a forward price-to-earnings ratio of about 24 and a price-to-sales ratio of about 7. While both have compressed sharply from earlier in the year, neither is a bargain for a business whose growth, while strong, is gradually slowing from high-20s rates of a few years ago.

Yahoo Finance AIRead Original Article

Send on LINE

AI news that matters for your work, delivered every morning.

Pick your industry and the AI tools you use, and get news related to your work every day.

Get it free

Free · 30 seconds with Google · unsubscribe anytimeWhat is AIToday? →

Ask AI

Ask AI anything about this article. The AI reads this article, earlier AIToday articles, and Wikipedia, and cites its sources. Q&As are published on this page for other readers too.

Next articleMeta faces internal turmoil as AI spending surge triggers layoffs, surveillance