NOW Deepens Partnership With MSFT: Can it Drive Top-Line Growth?

ServiceNow NOW is expanding integrations with Microsoft MSFT, including a new one with Microsoft Agent 365 targeted at providing seamless, enterprise-grade orchestration, governance, and collaboration across AI agents and workflows. The expanded partnership connects ServiceNow’s AI Platform with Microsoft 365, Copilot, Foundry and GitHub. These integrations will help enterprises manage autonomous AI agents with unified controls, consistent policies, and end-to-end visibility.

The deepening relationship between ServiceNow and Microsoft will now integrate NOW’s AI Control Tower with Microsoft Foundry and Copilot Studio to automatically discover, manage, and enforce governance across AI agents running on Microsoft platforms. ServiceNow Build Agent now integrates with GitHub’s Model Context Protocol Server, allowing secure access to GitHub issues, pull requests, and discussions. Moreover, an upcoming integration between ServiceNow’s Now Assist and Microsoft Agent 365 will bring enterprise workflows directly into Word, Outlook and Teams.

The expanding Microsoft collaboration bodes well for ServiceNow’s prospects. NOW’s expanding portfolio, growing workflow adoption and rich partner base are expected to improve its top-line growth. ServiceNow raised subscription revenue guidance for 2025 post third-quarter 2025 results, which is now expected between $12.835 billion and $12.845 billion, suggesting 20% on a non-GAAP constant currency (cc) basis and 20.5% on a reported basis from 2024’s reported figure. However, this is slower than NOW’s subscription revenue growth rate of 23% in 2024. The company’s fourth-quarter 2025 guidance reflects tightening budgets of the U.S. federal agencies, which is expected to hurt subscription revenues.

Tough Competition Hurts NOW’s Prospects

NOW faces stiff competition from the likes of Atlassian TEAM and Salesforce CRM. Atlassian is a global leader and innovator in the enterprise collaboration and workflow software space. The company is poised to grow given the rising demand for automated and improved communication systems within organizations. Atlassian is currently focused on selling more subscription-based solutions. Subscriptions have been the company’s fastest-growing segment, which has witnessed a CAGR of approximately 40% between fiscal 2020 and fiscal 2025.

Salesforce is focusing on enhancing its AI capabilities and data cloud business. Data Cloud platform pulls customer data from many systems and makes it usable across Salesforce products. In the second quarter of fiscal 2026, the company reported a 140% year-over-year surge in Data Cloud customer adoption. Salesforce is also integrating the Data Cloud platform with its other tools like Agentforce, Tableau and Slack. These integrations are helping enterprises easily analyze their data and apply AI across operations. CRM’s Agentforce has secured more than 6,000 paid deals since its launch just three quarters ago, indicating strong demand for AI tools that enhance enterprise workflows.

NOW’s Share Price Performance, Valuation & Estimates

NOW shares have dropped 24.6% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 25.9%.

NOW Stock’s Performance

ServiceNow stock is overvalued, with a forward 12-month price/sales of 10.83X compared with the broader sector’s 6.61X. NOW has a Value Score of F.

NOW Valuation

The Zacks Consensus Estimate for fourth-quarter 2025 earnings is pegged at $4.35 per share, down by a nickel over the past 30 days, suggesting 18.53% year-over-year growth.

ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

ServiceNow currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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