ServiceNow (NOW) jumped 14% by midday trading, leading a broad software rally as investor sentiment shifted from AI disruption fears to renewed confidence in enterprise platforms.
The move represented a remarkable reversal for a stock that had previously plunged 42%, with ServiceNow now posting a third consecutive day of strong gains on heavy volume.
Trading volume hit 39.1 million shares, more than double ServiceNow’s daily average, underscoring the intensity of renewed investor interest in the enterprise software giant.
The company reported adjusted earnings of $0.90 per share, beating the consensus estimate of $0.86, while total revenue reached $3.99 billion against a $3.93 billion forecast.
Subscription revenue surged 24.5% year-over-year to $3.88 billion, giving investors a concrete reason to believe the company’s core business remains on solid footing.
Management raised its full-year subscription revenue guidance midpoint to approximately $15.77 billion, implying around 21% constant-currency growth for the fiscal year.
Perhaps most notably, ServiceNow disclosed that AI annual contract value has crossed the $1 billion threshold, a milestone that helped reframe the AI narrative for software investors broadly.
Current remaining performance obligations reached $13.2 billion, providing strong forward revenue visibility that further bolstered confidence among institutional investors.
Bank of America analyst Tal Liani reinstated coverage of the stock with a buy rating, praising the “mission-critical” role of ServiceNow’s AI Control Tower platform in managing and governing autonomous AI agents.
Liani raised his price target to $150, up from $130, representing potential upside of 26% compared to the stock’s recent closing price.
ServiceNow Chief Product Officer and COO Amit Zavery argued that even as companies adopt AI agents, businesses still need tools to track usage, costs, licenses, workflows, and visibility across both traditional software and AI tools.
Zavery emphasized that ServiceNow customers want AI built into the products they already use, not treated as a separate add-on, a positioning that strengthens the company’s competitive moat.
The broader rally extended well beyond ServiceNow, with Snowflake (SNOW) surging 36% to an all-time high following its own strong earnings report.
Microsoft (MSFT) also gained ahead of its Build 2026 conference, adding further momentum to the sector’s recovery from weeks of AI-related anxiety.
The iShares Expanded Tech-Software Sector ETF (IGV) rose over 5%, signaling a wider reassessment of how artificial intelligence fits into the future of large enterprise software platforms.
The popular narrative that AI agents will eliminate the need for traditional software businesses is proving too simplistic, as the proliferation of AI tools may actually increase demand for platforms that govern and manage them.
