ServiceNow (NOW) shares jumped approximately 9% in Friday morning trading, reaching an intraday high of $120 before settling near $118.99. The rally was fueled by a new partnership with Wipro and renewed analyst attention on whether artificial intelligence will bolster the workflow-software company or disrupt its existing business model.
The partnership, announced Thursday, will integrate Wipro's intelligence suite with the ServiceNow AI Platform to automate tasks across IT, human resources, procurement, and cybersecurity. Wipro's India-listed shares rose as much as 4%, while its U.S. ADRs surged nearly 19% overnight. ServiceNow President and Chief Product Officer Amit Zavery emphasized that the collaboration focuses on "connected, governed, and outcome-driven AI," while Wipro's Malay Joshi noted that the challenge for most enterprises is "not ambition, but execution at scale."
Financial Highlights and Growth Trajectory
ServiceNow reported first-quarter subscription revenue of $3.67 billion, a 22% increase year-over-year. Current remaining performance obligations—contracted revenue expected to be recognized over the next 12 months—reached $12.64 billion, also up 22.5%. At its investor day earlier this month, the company set a target of exceeding $30 billion in subscription revenue by 2030, roughly double its expected 2026 level.
The company's Now Assist AI product has already surpassed $750 million in annual contract value as of the first quarter, with expectations to exceed $1.5 billion by year-end. These figures provide ammunition for bulls who argue that ServiceNow is positioned to benefit from AI adoption rather than be replaced by it.
Analyst Perspectives and Competitive Landscape
Despite the bounce, ServiceNow shares remain under pressure, down 27% year-to-date at $107.62 before the rally, and well below their July 2025 high. Bank of America analysts recently reinstated coverage with a Buy rating and $130 price target, arguing that ServiceNow should gain from AI integration. However, Zacks Investment Research's Subhasish Mukherjee cautioned that sustaining growth will depend on differentiating its AI platform amid rising enterprise-AI competition.
The broader software sector is grappling with similar dynamics. Salesforce this week issued a second-quarter revenue forecast below Wall Street estimates, even after a stronger first quarter, as investors weigh AI disruption fears. Valoir CEO Rebecca Wettemann noted that "the next few quarters will be critical" for Salesforce to prove value from both core licenses and AI products. Conversely, Workday saw its shares rise last week after results eased some concerns, with Jefferies analysts citing its relative insulation from AI disruption.
Risks and Execution Challenges
The risk for ServiceNow is clear: if AI agents reduce paid software seats faster than AI consumption revenue replaces them, the company's pricing model could face pressure. First-quarter results also highlighted execution risks, including delayed Middle East deals that hurt growth and the Armis cybersecurity acquisition expected to weigh on near-term margins.
For now, the Wipro deal provides another proof point in ServiceNow's narrative that large enterprises require governed AI within existing workflows, not just standalone models. The next test will be whether such partnerships translate into larger contracts, stronger current remaining performance obligations, and clearer AI revenue disclosure in coming quarters.
