The Ultimate Workflow Engine: Why ServiceNow (NOW) is Still a Must-Watch in the AI Era
For investors keeping a close eye on the enterprise software landscape, ServiceNow (NOW) has been an undeniable powerhouse. But with a history of strong growth, the big question is always, “What’s next?” The bull case for ServiceNow isn’t about maintaining the status quo, it’s about a bold, aggressive pivot into the generative artificial intelligence market that is solidifying its position as a true enterprise cornerstone.
The company’s foundation is as rock-solid as ever. ServiceNow is deeply embedded in the mission-critical operations of the world’s largest corporations, boasting an impressive customer base that includes 85% of the Fortune 500. This level of adoption ensures massive customer stickiness, helped by the fact that over three-quarters of its customers utilize four or more of the platform’s modules. This “land-and-expand” strategy, coupled with a nearly 98% renewal rate, creates a formidable economic moat that few competitors can cross.
But the real excitement is the company’s new accelerator: the integration of generative AI. ServiceNow’s purpose-built generative AI product, dubbed “Now Assist,” has quickly become the fastest-selling product in the company’s history. It’s not just a flashy add-on; it’s an automation engine that uses AI agents to deliver real business outcomes across an organization’s four key workflow segments: Technology, Customer and Industry, Employee, and Creator. Whether it is an IT agent using it to resolve a complex incident faster or a developer generating new code through natural language, Now Assist is actively driving greater enterprise productivity. In fact, the surge in AI-driven deals was cited as a major contributor to a recent robust quarter.
This rapid innovation is translating directly into financial performance. The company’s second-quarter 2025 results showed total revenue climbing 22.4% year-over-year to $3.22 billion, well ahead of expectations. Subscription revenue is projected to be between $12.775 billion and $12.795 billion for the full year 2025, representing strong growth. Furthermore, the operating margin continues to expand, reaching 29.5% in the second quarter, demonstrating an ability to scale efficiently.
ServiceNow is also aggressively widening its total addressable market (TAM), which management projects will hit a massive $275 billion by 2026. Key to this expansion is moving beyond its core IT Service Management dominance into areas like Customer Relationship Management (CRM), where its annual contract value is already substantial.
Most recently, the company underscored its focus on the future of enterprise AI by announcing its intent to acquire the identity security startup Veza in December 2025. This move is specifically designed to enhance the platform’s security framework and govern access for the growing number of AI agents operating across customer enterprises. By combining its workflow prowess with cutting-edge, secure AI, ServiceNow is positioning itself as an essential “AI control tower” for the world’s largest companies. This strategic vision and execution explain why many analysts view ServiceNow as a dominant, high-quality compounder with enduring growth tailwinds in automation and artificial intelligence.
