ServiceNow Has $750M in AI Contracts to Prove the Hype — But the Fed Is Still Calling the Shots

The disconnect in ServiceNow’s stock has rarely been starker. On one side sits a machine churning out more than 20% revenue growth, a freshly reworked pricing model that puts artificial intelligence at the core of every tier, and a rapidly expanding partnership with IBM targeting the industry’s most painful legacy IT problems. On the other side sits a share price that has barely budged over the past month and trades at roughly half the average price target set by Wall Street analysts.

That contradiction is the story of ServiceNow in 2026 — and it hinges almost entirely on the direction of long-term interest rates.

By the end of the first quarter, the company’s annual contract value (ACV) from its Now Assist AI suite had reached approximately $750 million, up from $600 million at the close of 2025. Management has since raised its near-term targets for the product line. Deals involving three or more Now Assist modules jumped almost 70% year-over-year, and 36 transactions in the period included five or more modules. Those figures are not aspirational forecasts; they represent signed contracts already converting into recurring revenue.

The broader platform metrics back up the narrative. Remaining performance obligations stood at $12.64 billion as of March 31, a 22.5% increase from the prior year. Full-year revenue guidance was lifted to a range of $15.735 billion to $15.775 billion, implying roughly 20% to 21% growth in constant currency. By 2030, management is aiming for $30 billion in subscription revenue alone, with Now Assist contributing about 30% of that total — a trajectory that would require roughly 19% annual growth, a pace the company has already been exceeding in recent quarters.

A structural shift that received less attention in the market came in April, when ServiceNow overhauled its pricing architecture. The old editions were replaced by three new AI-native tiers — Foundation, Advanced and Prime — each of which includes an AI usage allowance. Previously, AI capabilities were sold as a separate add-on. The change signals that artificial intelligence is no longer a feature bolted onto the platform; it is the platform.

Should investors sell immediately? Or is it worth buying ServiceNow?

The company has also been busy building bridges into the messy reality of enterprise IT. In June it announced a partnership with IBM that combines Big Blue’s automation and AI capabilities with ServiceNow’s orchestration layer. The goal is to help large organizations navigate decades of deeply embedded legacy systems without tearing everything down and starting over — a problem ServiceNow is betting will define the next corporate IT cycle. Joint solutions are expected to hit the market in the second half of 2026.

Despite all this activity, the stock is stuck. At around €85.50, it sits roughly 5% lower than it did a month ago. The relative strength index hovers near 45, neutral territory, while annualized volatility has clocked in at nearly 80%. Last year, the stock logged 24 separate moves of more than 5% in a single session — a reflection of how sensitive this name has become to macroeconomic noise.

The biggest source of that noise is the Federal Reserve. Software companies with earnings far into the future are acutely sensitive to discount rates, and every shift in long-term yields mechanically reprices their shares. After new Fed chair Kevin Warsh held rates steady at his first meeting, the median projection for end-2026 rose to 3.8%, implying at least one more increase. The stock dropped 6% that day. Strong economic data harms the stock as well; a robust jobs report in the spring showing 172,000 new payrolls (well above expectations) and unemployment steady at 4.3% pushed shares down 5%.

The analyst community sees a different valuation than the market. The average price target among the 33 analysts covering the stock stands at €124.66, implying upside of nearly 48% from current levels. Every single analyst rates it a buy. The stock’s forward price-to-earnings multiple of 21 is a far cry from its five-year average of roughly 60, but that compression reflects the macro environment rather than any deterioration in the business.

ServiceNow has been growing at more than 20% annually for over a decade, holds non-GAAP operating margins above 30%, and is building a platform that customers find difficult to replace. The operational story is as strong as it has ever been. The question is whether the macro clock will start ticking in the company’s favor before the market’s patience runs out. For now, the decisive catalyst does not originate in Santa Clara — it comes from Washington.