When enterprise software company ServiceNow (NYSE:NOW) reported second-quarter results in July, one disclosure stood out from the usual run of strong numbers. The company’s artificial intelligence (AI) products crossed $1 billion in annual contract value (ACV), the yearly value of its signed contracts.
A billion dollars is still a small piece of a company expecting nearly $16 billion of subscription revenue this year. But it’s one of the fastest-growing pieces of the business.
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My prediction: ServiceNow’s AI business triples to $3 billion in annual contract value before 2029. Here’s a closer look at why I think the company gets there.
Image source: Getty Images.
A new billion-dollar business
The AI line’s climb has been steep. In the fourth quarter of 2025, ServiceNow said net new ACV for Now Assist, its generative AI product line, more than doubled year over year.
Customers putting more than $1 million annually into Now Assist grew over 130% in the first quarter of this year. And in the second quarter, the company said ServiceNow AI crossed the billion-dollar mark.
Adoption of its AI agents (software that completes tasks on its own) is running hotter still.
“[A]gentic deployments of ServiceNow AI increased ninefold in just nine months,” said chairman and CEO Bill McDermott in the second-quarter earnings release.
The platform those agents plug into is healthy, too. Subscription revenue reached about $3.9 billion in the second quarter, up 24.5% from the year-ago period. Management raised its full-year subscription revenue guidance to between $15.76 billion and $15.78 billion, the second raise this year, up from an initial call of about $15.5 billion. And ServiceNow signed 123 deals worth more than $1 million in net new ACV during the quarter, up nearly 40% year over year.
“AI net new ACV growth continues to outpace expectations,” said president and chief financial officer Gina Mastantuono in the same release.
Management’s own target is bigger
Tripling from $1 billion by the end of 2028 requires about 55% annual growth, sustained for two and a half years. In dollar terms, ServiceNow would need to add an average of about $800 million of new AI contract value a year. Spread across the nearly 500 large deals a year the company is signing at its second-quarter pace, it comes to about $1.6 million of AI value per deal — and with that deal count growing nearly 40% a year, the per-deal ask shrinks over time.
It’s a demanding pace. But management is asking even more of itself.
At its Financial Analyst Day in May, ServiceNow outlined 2030 targets that include more than $30 billion in subscription revenue and 30% of ACV coming from AI. The company doesn’t publish a total annual contract value figure. But for AI to reach 30% of it while subscription revenue tops $30 billion, the AI line would need to sit far above $3 billion by 2030, which means passing $3 billion along the way.
In other words, my prediction mostly asks ServiceNow to stay on the road map it has drawn for itself.
Deployments aren’t dollars yet
Of course, the ninefold figure measures deployments, not dollars. A customer can turn on agents widely while paying narrowly at first, and the tripling happens only if that usage keeps converting into signed contract value.
The base is getting heavier, too. After all, the growth rates above were earned against a small starting number, and every year of the prediction starts from a bigger one. A softer spending environment, or pricing pressure from the many software companies now selling AI agents, could also erode the premium growth rate the prediction requires.
What does falling short look like? If the AI line merely grew at the pace of ServiceNow’s overall business from here, it would end 2028 at around $1.7 billion.
That would still be a fine outcome. It would also be a little more than half of my target.
Ultimately, though, the recent disclosures show a line compounding well above the required pace.
If net new AI contract value growth slows toward the pace of the broader business for a couple of quarters, I’d walk the target back. For now, however, I expect ServiceNow’s AI business to pass $3 billion before 2029.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.
