ServiceNow shares climbed 2% on Thursday even as major indexes fell, lifted by an earnings beat and a growing AI pipeline. The company's AI annual contract value topped $1 billion, and cybersecurity has emerged as a fresh growth driver.
ServiceNow bucks a tech selloff
ServiceNow stock rose 2% in recent morning trading, standing out against a broad tech decline after an earnings beat and renewed confidence in its artificial-intelligence strategy. The move marked a turn for a software giant whose shares had been weighed down this year by fears of AI disruption.
Broad indexes fell as ServiceNow climbed. The S&P 500 dropped more than 1% on Thursday. Meanwhile the tech-heavy Nasdaq composite slid 2.4%, with investors digesting Alphabet and Tesla earnings.
An AI pipeline that reassured investors
The company posted second-quarter subscription revenue of $3.88 billion, up 25% year over year. The bigger focus was its current remaining performance obligations — revenue expected over the next 12 months — which rose 21% to $13.2 billion.
That figure gave investors the evidence they wanted that ServiceNow is benefiting from the AI boom, signaling a robust pipeline of demand. Its AI annual contract value surpassed $1 billion, putting the company ahead of schedule to beat a year-end target of $1.5 billion.
According to MarketWatch, Freedom Capital Markets strategist Jay Woods saw room for a further 10% relief rally, writing in a Thursday note: “To see ServiceNow have the quarter they did was much of a relief”.
Cybersecurity turns into a growth driver
ServiceNow's security push also drew praise. Over the past year it acquired the cybersecurity firms Armis and Veza to build out its security and risk platform, deals criticized at the time for their high price.
That bet is now paying off. Jefferies analyst Samad Samana wrote that security and risk featured in 16 of the company's top 20 deals during the quarter, with customers using its AI Control Tower to manage cybersecurity work.
Bank of America's Tal Liani added that ServiceNow's role as an enterprise's system of record gives it a strategic edge over third-party AI tools that must extract and reintegrate data across platforms.
Source: MarketWatch
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