Why ServiceNow (NOW) Stock Is Up Today

What Happened?

Shares of enterprise workflow automation company ServiceNow (NYSE:NOW) jumped 3.3% in the afternoon session after the stock extended its positive momentum as the company announced a significant agreement with the U.S. General Services Administration (GSA) to advance AI-driven modernization across federal agencies. 

The "OneGov" agreement expands ServiceNow's federal footprint by offering agencies access to its Information Technology Service Management (ITSM) software at discounts of up to 70%. This initiative is expected to boost government workflow efficiencies by as much as 30%. 

Following the news, Wall Street analysts reiterated their positive outlooks. Truist Securities maintained its "Buy" rating on the stock with a $1,200 price target, highlighting the company's impressive gross profit margins and strong revenue growth. Similarly, Stifel reiterated its "Buy" rating, noting an uptick in federal business performance. This momentum is supported by a strong second quarter, where ServiceNow saw total revenue grow 22.5% and increased the number of customers with over $20 million in annual contract value by 30% year-over-year.

The shares closed the day at $940.30, up 2.9% from previous close.

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What Is The Market Telling Us

ServiceNow’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock gained 15.2% on the news that the company reported strong first-quarter 2025 results, with cRPO (current remaining performance obligations) and RPO (remaining performance obligations) both beating. Although reported revenue roughly met expectations, profitability outperformed, leading to beats for adjusted operating income and adjusted EPS. Revenue from the US public sector grew net-new ACV (annual contract value) over 30% in the quarter, which is better than many investors expected under the new Trump administration. Overall, the result was impressive, especially considering how the markets were worried about the health of ServiceNow's enterprise customers and their appetite to spend amid an uncertain macro backdrop.

ServiceNow is down 10.4% since the beginning of the year, and at $945 per share, it is trading 19.3% below its 52-week high of $1,170 from January 2025. Investors who bought $1,000 worth of ServiceNow’s shares 5 years ago would now be looking at an investment worth $2,133.

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