Buy, Sell or Hold ServiceNow Ahead of Earnings?

Investors must decide whether to buy, sell or hold ServiceNow shares as the stock has fallen 32% year-to-date and 46% over the past 12 months. Attention is focused on the company’s upcoming earnings amid concerns that AI-driven agents and a shift to hardware spending could affect demand for enterprise software.

ServiceNow reported first-quarter subscription revenue rose 22% to $3.6 billion. Remaining performance obligations increased 22.5% to $12.64 billion. Operating margin widened by 100 basis points to 32%.

Analysts expect revenue growth to continue. The average estimate for the most recent quarter is about $3.93 billion, up roughly 22.2% year over year. Estimates for the third quarter center near $4.12 billion, a roughly 21% year-over-year increase. If those projections hold, annual revenue would track to about $16.1 billion this year and about $19.2 billion next year. The company has a record of exceeding analyst estimates.

ServiceNow serves more than 9,000 customers, including Microsoft, NVIDIA, Amazon, IBM and Accenture, and counts about 85% of the Fortune 500 as clients. Its software is used to streamline workflows, improve collaboration and support enterprise productivity.

Market concerns have weighed on the share price. Investors have cited the risk that generative AI agents could automate tasks now handled on ServiceNow platforms, and some vendors have noted a possible shift in corporate spending toward hardware. The stock fell from a year-to-date high near $239 to roughly $103.

Technical data show the 50-week and 200-week exponential moving averages have crossed, a pattern some traders view as bearish. The shares trade below a resistance level near $135.85 and remain above a year-to-date low near $80.

Analyst coverage remains largely positive: there are three sell ratings and 36 buy ratings, with an average price target around $141. Analysts at several brokerages recently reiterated bullish outlooks for the stock.

Investors will look to the upcoming earnings release for updated revenue, margin and guidance figures and for management commentary on AI-related opportunities and competitive pressures.