Can AI Control Tower Become ServiceNow's Next Growth Engine?
ServiceNowNOW is seeing strong demand for AI Control Tower. Rising adoption of AI tools is creating the need for visibility into how these systems operate, what actions they take and whether they comply with company policies. This is where ServiceNow's AI Control Tower comes in to address the above-mentioned requirements and help customers monitor, manage and govern AI agents from a single platform.
Average AI Control Tower deal sizes more than doubled sequentially in the first quarter of 2026. Per management, customers view AI governance more as a requirement rather than an optional feature. Further, as AI agents become more capable and are used across more business functions, they need a platform that can monitor and govern these systems, which should help drive demand for AI Control Tower.
ServiceNow believes its large workflow platform gives AI Control Tower a significant advantage. Management stated that its systems have been trained on more than 95 billion workflows and over seven trillion transactions. Through its Context Engine, AI Control Tower can use information from existing workflows, approvals and business rules to help customers manage AI-driven actions. This allows organizations to manage AI-driven actions using existing business controls and governance frameworks.
Rising adoption of ServiceNow's AI products is boosting the demand for AI Control Tower. For instance, Now Assist is helping generate interest in AI Control Tower as customers expand AI deployments across their organizations. Further, with rising AI adoption, governance becomes more important, and this positions AI Control Tower to become a meaningful contributor to ServiceNow's future growth.
The Zacks Consensus Estimate for ServiceNow's 2026 and 2027 revenues indicates year-over-year growth of 21.9% and 18.1%, respectively.
ServiceNow Faces Stiff Competition
ServiceNow is facing stiff competition from the likes of SalesforceCRM and AtlassianTEAM.
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 37.1% year to date compared with the Zacks Computers - IT Services industry’s decline of 21.7%.
NOW’s YTD Price Performance
Image Source: Zacks Investment Research
ServiceNow stock is overvalued, with a forward 12-month price/earnings (P/E) of 21.04X compared with the industry’s 17.71X. NOW has a Value Score of D.
NOW Forward 12 Months (P/E) Valuation Chart
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ServiceNow’s 2026 earnings is pegged at $4.14 per share, unchanged over the past 30 days. The figure indicates a 17.95% increase year over year.
Image Source: Zacks Investment Research
ServiceNow stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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See Top Quantum Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).
