ServiceNow AI Revenue Could Hit 10% as Enterprise Spending Cools
Oppenheimer expects ServiceNow to post solid first-quarter results with growing AI revenue, but cut its price target as enterprise software demand slows. The analyst trimmed its target to $130 from $175 while keeping an Outperform rating.
The firm expects Q1 revenue of $3.74 billion and adjusted earnings per share of $0.96. Demand checks came in slightly positive, but they also showed a cooler purchasing environment than the prior quarter-a shift that typically extends sales cycles and complicates renewals.
AI Revenue Becomes the Differentiator
The real story is AI monetization. Oppenheimer believes ServiceNow could be the first major enterprise software company to derive more than 10% of revenue from AI by the fourth quarter of 2026. That milestone matters because it would signal AI has moved from a sales pitch to a material revenue driver.
For sales professionals, this shift is critical. It means buyers are no longer just adding seats-they're demanding proof that AI tools actually automate work and deliver measurable returns. AI for Sales capabilities are becoming table stakes for vendors competing in this environment.
What This Means for Deal Cycles
Longer sales cycles and tougher renewal negotiations reflect a broader shift in how enterprises buy software. After years of growth-at-all-costs spending, CIOs now push vendors to prove ROI and consolidate tools rather than add more.
For sales teams, this means longer deal timelines and higher scrutiny on value delivery. Understanding how AI fits into a customer's workflow-not just that it exists-determines whether deals close.
The $45 price target cut signals how fast software valuations can reset when budget discipline tightens. Premium-priced platform companies with aggressive growth assumptions have little room for error.
The Benchmark Question
If ServiceNow reaches 10% AI revenue, it becomes the yardstick investors use to measure whether AI has matured into genuine business value or remains mostly marketing. That benchmark will shape how enterprises evaluate AI investments across the entire software category.
For sales leaders, the lesson is straightforward: AI revenue that's real and measurable beats AI features that sound good. Build your pitch around documented outcomes, not capabilities.
Learn more about AI strategies for sales representatives navigating these changing buyer expectations.
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