Goldman Sachs Raises Price Target for ServiceNow Amid Strong Q2 Results and AI Growth
ServiceNow's second-quarter results exceeded expectations across revenue, earnings, and bookings despite broader concerns in the enterprise software sector about AI disrupting traditional SaaS models. The company reported a 24.5% year-over-year increase in subscription revenue to $3.877 billion. Goldman Sachs raised its price target for ServiceNow from $145 to $152 while maintaining a 'buy' rating, emphasizing the importance of proving relevance within enterprise AI stacks rather than just meeting quarterly guidance. Goldman highlighted that ServiceNow's AI annual contract value (ACV) crossed $1 billion in Q2 and is on track to exceed its 2030 target years ahead. The firm noted stronger customer entrenchment from AI deployments, with net new AI bookings growing over 40% quarter-over-quarter and first-time AI buyer deal volume rising by 45%. ServiceNow's Level 1 IT service management product now resolves up to 85% of requests without human intervention. The company is also expanding into voice-based customer service solutions, with one airline routing five million calls annually through its Voice AI. Goldman expects this shift toward automation and consumption-based monetization will drive long-term value.
Topics: AI impact on SaaS earnings report Goldman Sachs price target upgrade ServiceNow