ServiceNow Inc. (NYSE: NOW) continues to demonstrate exceptional performance in 2025, with the enterprise software giant’s stock trading at $956.43 as of July 24, 2025. The company’s impressive Q2 2025 earnings results released on July 23 have sent shares soaring 7% in after-hours trading, reflecting investor confidence in the company’s AI-driven growth strategy.
The Santa Clara-based cloud computing platform provider has positioned itself at the forefront of the artificial intelligence revolution, with CEO Bill McDermott declaring that “every business process in every industry is being refactored for agentic AI.” This bold vision is backed by robust financial performance that continues to exceed Wall Street expectations.
Q2 2025 Financial Highlights
ServiceNow’s second-quarter results showcased the company’s strength across all key metrics:
- Earnings per share: $4.09 adjusted vs. $3.57 expected
- Revenue: $3.22 billion vs. $3.12 billion expected
- Subscription revenue: $3.11 billion, topping the $3.03 billion forecast
- Net income: $385 million, up 47% year-over-year
- Operating margin: 29.5%, over 2.5 points above guidance
The company’s subscription revenue growth of 21.5% year-over-year in constant currency demonstrates the strong demand for its AI-enabled digital workflow solutions. ServiceNow also raised its full-year 2025 subscription revenue guidance to between $12.775 billion and $12.795 billion, signaling continued momentum.
AI Strategy Driving Growth
ServiceNow’s transformation into an AI-first platform is paying dividends. The company has rebranded its Now Platform as the ServiceNow AI Platform, embedding AI agents across IT, HR, finance, and customer engagement operations. This strategic shift is reflected in the numbers:
- Key AI Pro Plus deal count up over 50% quarter-on-quarter
- 89 deals greater than $1 million in net new ACV, with 11 deals exceeding $5 million
- Pro Plus deals quadrupled year-over-year, with 39 deals featuring three or more Now Assist products
The company’s AI initiatives extend beyond external offerings. ServiceNow currently runs over 200 agentic use cases in production internally, generating $325 million in annual savings. This demonstrates the real-world effectiveness of its AI solutions and serves as a powerful proof point for potential customers.
Strategic Partnerships and Acquisitions
ServiceNow’s growth strategy includes strategic partnerships and targeted acquisitions to enhance its AI capabilities:
- NVIDIA Partnership: Collaboration on AI models and integration of advanced capabilities
- Cisco Integration: Integration of Cisco’s AI Defense into ServiceNow’s AI Control Tower
- Moveworks Acquisition: Enhancing front-end AI assistant and enterprise search technology
- Logik.ai Acquisition: Strengthening AI-powered CPQ (Configure, Price, Quote) solutions
These strategic moves position ServiceNow to capture a larger share of the rapidly growing enterprise AI market, with the company’s AI Agent Studio and Workflow Data Fabric enabling businesses to build custom AI workflows without coding.
Stock Performance and Analyst Outlook
ServiceNow’s stock has shown resilience despite broader market volatility. Key metrics include:
- Current price: $956.43 (as of July 24, 2025)
- 52-week range: $678.66 to $1,198.09
- Average 12-month price target: $1,098.92
- Analyst consensus: 40 analysts recommend buying, 1 suggests selling (Strong Buy rating)
The stock’s 14.90% upside potential according to analyst estimates reflects confidence in ServiceNow’s ability to maintain its growth trajectory. The company’s current remaining performance obligations (cRPO) of $10.92 billion, up nearly 25% year-over-year, provide strong visibility into future revenue streams.
Q3 2025 Outlook and Beyond
Looking ahead, ServiceNow provided strong guidance for the third quarter of 2025:
- Q3 subscription revenue: Between $3.26 billion and $3.27 billion (vs. $3.21 billion analyst estimate)
- Q3 operating margin guidance: 30.5%
- Full-year 2025 growth projection: 20% year-over-year subscription revenue growth
The company’s focus on consumption-based pricing for AI solutions and the monetization of AI agents positions it well for sustained growth. With 528 customers with more than $5 million in ACV, ServiceNow has built a strong foundation of enterprise clients driving recurring revenue.
Risks and Considerations
While ServiceNow’s outlook remains positive, investors should consider several factors:
- Government sector uncertainty: Budget changes at U.S. government agencies could affect results
- Competitive landscape: Intense competition from Microsoft, Salesforce, and other enterprise software providers
- AI investment requirements: Continued heavy R&D spending (23% of revenue) to maintain technological edge
- Valuation concerns: Premium valuation requires consistent execution to justify
Investment Conclusion
ServiceNow’s Q2 2025 results reinforce its position as a leader in AI-driven enterprise transformation. The company’s ability to consistently exceed expectations, combined with its strategic positioning in the AI revolution, makes it an attractive option for growth-oriented investors.
With strong fundamentals, expanding margins, and clear visibility into future growth through its robust backlog, ServiceNow appears well-positioned to continue its upward trajectory. The stock’s recent performance and analyst optimism suggest that NOW remains a compelling investment opportunity in the enterprise software space.
As AI adoption accelerates across industries, ServiceNow’s comprehensive platform approach and proven execution make it a key beneficiary of this transformative trend. Investors looking for exposure to enterprise AI growth should carefully consider ServiceNow’s strong market position and growth prospects.
