Parkev Tatevosian, CFA on $NOW (Nov 2, 2026)

ServiceNow announced revenues exceeding $4.1 billion, an increase of more than 20% compared to the same period last year, and raised its full-year projections for 2026. However, investors were expecting and hoping for more and were disappointed with these quarterly results.

ServiceNow's stock fell sharply after the company announced these results, and is now trading at a much lower price . Investors are asking me whether this is a buying opportunity or if it's time to get rid of ServiceNow shares.

Management indicated that it exceeded the upper end of its expectations for revenue growth and profitability metrics, while raising its outlook for the remainder of 2026.

Remaining performance liabilities , which eventually convert into revenue, were a relatively bright spot this quarter, rising 22% to $29.7 billion. I like to see companies reporting this metric have higher growth than their revenue growth, and that's what I saw from ServiceNow, albeit by a very small margin .

22% growth in Remaining Performance Obligations (RPOs) compared to 20.5% growth in revenues. This suggests to me that revenue growth is sustainable at these levels, and may even accelerate if they can continue to sign contracts that increase their remaining performance obligations.

Recall that earlier this year, around February, ServiceNow was in the spotlight amid what was dubbed the “ SaaS-pocalypse,” when investors feared that companies like ServiceNow would be sidelined by organizations that went straight to big language models to integrate into their businesses.

That hasn't actually happened yet in 2026 , but ServiceNow has actually become the watchtower for artificial intelligence, with the annual value of its AI contracts rising again to $1.7 billion for 2026.

That represents a 70% increase compared to the beginning of the year. The management team indicated that the adoption of their artificial intelligence services is constantly accelerating.

In fact, they stated that ServiceNow is ideally positioned to help customers employ artificial intelligence in their business, manage every agent and every procedure, and turn intelligence into secure and measurable results.

In other words, it has become the watchtower for the application of artificial intelligence across the enterprise, controlling what AI can do, what permissions and limits are available to it, and so on.

They added that customers are rapidly increasing their use of AI proxies, with year-to-date consumption and output more than 13 times year-on-year.

One of ServiceNow's disappointments is the modest growth in its operating cash flow , which rose to $839 million compared to $813 million in the same quarter last year.

This comes even after the company acquired more than $9 billion worth of business in early 2026, which investors had hoped would boost the company's business growth. Therefore , the stock price collapse has resulted in ServiceNow now trading at a forward price-to-earnings ratio of just under 22.

This level is close to the lowest price at which the stock has ever traded. It is approaching the levels at which it traded previously during the Software as a Service ( SaaS) crisis, when its valuation based on a forward price-to-earnings ratio fell below 20.

I see this as an attractive buying opportunity because the company's earnings per share growth is expected to be greater than its forward price-to-earnings ratio. In fact, Wall Street analysts who follow ServiceNow expect the company to achieve earnings per share growth of about 24.5% over the next few years.

Again, this number is larger than the company's future earnings multiple, and usually when I see this, it looks like an attractive position. I have also updated my fair value calculation for ServiceNow by incorporating the latest developments into my future estimates.

The conclusion I reached is that the value of this business is approximately $143 per share, compared to the current market price of $105.

So, to answer the question I posed in the introduction and in the title, yes, I see this as a buying opportunity.