Can AI-Powered Security Services Fuel ServiceNow's Long-Term Growth?

ServiceNow NOW is expanding its security business as enterprises adopt AI across their operations. Deployment of AI agents is driving the need for tools to manage cyber risks, protect identities, monitor connected assets and automate security operations. This is creating a larger opportunity for Se…

ServiceNow NOW is expanding its security business as enterprises adopt AI across their operations. Deployment of AI agents is driving the need for tools to manage cyber risks, protect identities, monitor connected assets and automate security operations. This is creating a larger opportunity for ServiceNow to increase its presence in enterprise security.

To capture this opportunity, ServiceNow recently partnered with Accenture to help enterprises modernize their security operations. The new offering combines managed security services on the ServiceNow AI Platform with an AI-powered solution that helps customers migrate from legacy cybersecurity platforms. The solution also includes integrated risk management, third-party risk management, operational technology risk management and AI-powered compliance automation. These capabilities should help customers identify risks faster, automate routine security tasks and improve response times.

ServiceNow's recently completed Armis acquisition adds real-time visibility across IT, OT, IoT and medical devices, while Veza adds identity governance capabilities. Together with ServiceNow's AI Control Tower and Configuration Management Database, these solutions help customers discover assets, manage user and AI agent access, detect threats and automate remediation from a single platform.

Further, Armis is expected to contribute about 125 basis points to fiscal 2026 subscription revenue growth. As enterprises increase spending on AI-driven security and risk management, ServiceNow's expanding security portfolio, strategic partnerships and platform capabilities are likely to support higher customer adoption and create another long-term growth driver for the company. The Zacks Consensus Estimate for ServiceNow's 2026 and 2027 revenues indicates year-over-year growth of 21.9% and 18.2%, respectively.

ServiceNow Faces Stiff Competition

ServiceNow is facing stiff competition from the likes of Salesforce CRM and Atlassian TEAM.

Salesforce competes with ServiceNow through its offerings such as Agentforce, Data Cloud and Slack, through which it creates a unified ecosystem and connects customer data with integrated AI across systems, apps and devices. In the first quarter of fiscal 2027, Agentforce’s annual recurring revenues (ARR) surpassed $1 billion, up in triple digits year over year. Salesforce expects this momentum to continue in fiscal 2027, on the back of robust customer demand for its agentic offerings.

Atlassian competes with ServiceNow through its suite of cloud-based software solutions, such as Jira, Rovo and Teamwork Graph, which help organizations collaborate and manage their workforce. In the third quarter of fiscal 2026, Atlassian continued to add millions of monthly active users to Rovo, while strong customer engagement across Jira helped the company's cloud business grow 29% on a year-over-year basis.

NOW’s Share Price Performance, Valuation & Estimates

ServiceNow shares have plunged 51% year to date compared with the Zacks Computers - IT Services industry’s decline of 36%.

NOW’s YTD Price Performance

ServiceNow stock is overvalued, with a forward 12-month price/earnings (P/E) of 21.76X compared with the industry’s 16.59X. NOW has a Value Score of D.

NOW Forward 12 Months (P/E) Valuation Chart

The Zacks Consensus Estimate for ServiceNow’s 2026 earnings is pegged at $2.34 per share, unchanged over the past 30 days. The figure indicates a 19.3% increase year over year.

ServiceNow stock 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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