Key Points

ServiceNow maintains robust expansion even as AI uncertainties linger.
The company leverages AI effectively through its AI Control Tower offering.
ServiceNow shares are valued at a notable discount compared to historical norms.

ServiceNow (NYSE: NOW) stands as a leading technology firm supporting over 8,800 customers with its workflow automation solutions. The platform expands rapidly, yet the stock has declined 30% year to date.

Share prices often shift notably around earnings announcements as investors process fresh company details. ServiceNow will release results on July 22, potentially triggering a notable market response in either direction.

Is now the time to purchase the shares?

Image source: Getty Images.

Why investors remain cautious on ServiceNow

ServiceNow ranks among major software-as-a-service providers facing pressure from recent artificial intelligence advancements. The emergence of agentic AI has raised concerns that such tools might render many SaaS offerings unnecessary by handling similar functions directly.

Nevertheless, ServiceNow has delivered steady performance amid the agentic AI developments. Leadership has responded proactively by launching the Control Tower solution, which consolidates a firm's AI tools into a single interface and applies the company's core strength in linking workflow processes.

Although concerns exist, opportunities remain for ServiceNow to thrive. Fresh AI capabilities can reshape operations, and the firm capitalizes on this by providing an AI-centric platform focused on security and visibility, essentially AI overseeing AI.

Organizations gain multiple benefits from AI adoption, including faster operations and reduced manual work. Integrating the ServiceNow platform allows clients to redirect portions of those efficiencies, benefiting both parties and illustrating the company's adaptation to the AI landscape.

Can ServiceNow shift sentiment positively?

Investors will review financial results and guidance on July 22, along with management's perspective on the evolving environment. Through the initial quarter, the firm has shown steady progress in both revenue and profitability. Review its subscription revenue growth and operating margins across recent periods:

Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026
Subscription revenue growth (YOY)	19%	23%	22%	21%	22%
Operating margin	31%	29.5%	33.5%	31%	32%

Data source: ServiceNow quarterly reports. YOY equals year over year.

Sustaining growth alongside an improved bottom line adds further strength to the results.

Additionally, the stock trades at lower multiples while preserving its growth trajectory, with a P/E ratio of 64, roughly half its three-year average.

Data by YCharts.

The shares have fallen following each of the prior four quarterly releases, creating a challenging pattern ahead of the upcoming report. Still, history does not guarantee repetition.

ServiceNow commands a premium due to its track record and outlook. Regardless of the July 22 reaction, the current levels present a potential entry point. That said, the elevated valuation and questions around AI outcomes suggest limiting position size.

Should investors add ServiceNow shares at present?

Prior to purchasing ServiceNow stock, note the following:

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Jennifer Saibil holds no positions in the mentioned stocks. The Motley Fool maintains positions in and recommends ServiceNow. The Motley Fool follows a disclosure policy.

The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.