ServiceNow just announced a 5-for-1 stock split. So, is now the time to buy NOW stock?

The rise of artificial intelligence (AI) has made enterprise software the backbone of modern business, enabling automation, analytics and efficiency at scale. And California-based software maker ServiceNow (NOW) has weathered that wave in impressive fashion. The cloud workflow powerhouse is redefining the way businesses run and streamline digital operations.

Fueled by AI-driven demand, ServiceNow recently published a stunning third-quarter earnings report that exceeded Wall Street expectations and showed its growing dominance in business automation.

At the same time, the company made headlines by announcing its first-ever 5-for-1 stock split, pending shareholder approval in December. The move is intended to make expensive shares more accessible to a broader group of investors. Stock splits often increase liquidity and indicate management’s confidence in long-term growth.

Despite ServiceNow’s strong momentum and renewed enthusiasm from analysts, the stock is in the red this year. So could this be the buying window investors have been waiting for?

Founded in 2004, ServiceNow is transforming businesses around the world. The company delivers end-to-end intelligent workflow automation through its Now Platform, using AI and machine learning to streamline IT services, operations and risk management. From asset management to customer support, ServiceNow’s platform enables industries such as finance, healthcare and technology to operate more efficiently. With a market capitalization of $182.96 billion and a global presence, it remains a powerhouse in enterprise digital transformation.

ServiceNow’s AI capabilities integrate seamlessly with leading cloud providers, major language models, and enterprise data sources, serving as a “control tower” for modern businesses. The innovative pricing model – combining subscription and consumption-based structures – increases flexibility while increasing revenue through offers such as the popular Pro Plus tier. Internally, ServiceNow uses AI to eliminate repetitive tasks and “reengineer” the workforce, reflecting the transformation it is delivering to customers around the world.

The workflow automation software provider’s shares have risen more than 920% in the past decade and nearly 115% in the past three years, demonstrating its dominance in the enterprise software space. Yet 2025 was not all plain sailing. Despite excellent business execution, NOW shares are down 19% year-on-year (YTD), reflecting broader pressure in the software sector and continued fears of a slowdown.

The software giant’s shares aren’t cheap, trading at 90.8 times forward earnings and 16.81 times revenue. That’s a significant premium compared to the broader technology sector. But that’s the price investors pay for a front-row seat to the enterprise AI revolution. The company has earned its premium through consistent growth, fat margins, and a reputation as an indispensable digital workflow engine for global businesses.

ServiceNow’s third-quarter performance reminded Wall Street why it has become a cornerstone of enterprise AI transformation. On October 29, the workflow automation giant posted results above every major metric, powered by rising demand for its AI-driven tools like Now Assist and Workflow Data Fabric. Revenue rose 22% year-over-year to $3.4 billion, while earnings rose 29.6% annually to $4.82, beating expectations.

Subscription revenue rose 21.5% annually to $3.3 billion, underscoring its powerful recurring engine and strong loyalty to businesses across all industries.

The growth was widespread, especially in the US federal segment, where large enterprises scaled digital transformation projects. Non-GAAP current remaining performance obligations (CRPO) were $11.27 billion, up 20.5%, beating the company’s expectations by 250 basis points, while total RPO rose to $24.1 billion. The company also closed 103 deals above $1 million in new annual contract value (ACV), and now has 553 customers contributing more than $5 million in ACV, representing 18% year-over-year growth.

Looking ahead, management saw fourth-quarter subscription revenue in the range of $3.42 billion to $3.43 billion, reflecting growth of 19.5%, and between 17.5% and 18% at constant exchange rates. However, management warned that on-site renewals could weigh slightly on subscription growth in the fourth quarter. As CFO Gina Mastantuono noted, “on-prem is definitely a factor in Q4,” pointing to near-term headwinds as customers move from older on-premises setups to the cloud.

Yet management remains confident. For the full year, the company expects subscription revenue in the range of $12.835 billion to $12.845 billion, up 20.5% and growing 20% ​​annually at constant exchange rates. Margins are expected to remain solid: 83.5% in subscription gross profit, 31% in operating income margin and 34% in free cash flow.

Analysts tracking ServiceNow expect earnings per share to be about $9.78 in fiscal 2025, representing 35.8% year-over-year growth, and then rise another 21.5% to $11.88 in fiscal 2026.

ServiceNow shares have stalled this year, but Wall Street confidence remains unaffected, with the stock sporting a ‘Strong Buy’ rating overall. Of the 41 covering the fintech stocks, 34 recommend a ‘strong buy’ and three recommend a ‘moderate buy’. Meanwhile, only three analysts are cautious with a ‘Hold’, while only one labels it a ‘Strong Sell’.

NOW’s average analyst price target of $1,159.94 implies 35% upside potential. The Street-high price target of $1,332 suggests the stock could rise as much as 55% from here.

Stock splits often feel like a party; the way a company signals that it has reached a milestone worth sharing. ServiceNow’s 5-for-1 split fits that description perfectly, coming on the heels of stellar profits and unshakable long-term momentum.

This move may make headlines, but it’s ultimately a reflection of how far the company has climbed in the rise of AI-powered enterprise software. While the split could expand ServiceNow’s investor base, increase liquidity, and draw new attention from Wall Street, it doesn’t change the company’s fundamentals; it simply repackages success into smaller, more accessible segments. While fractional investing has lowered the barrier to entry, a lower price tag still provides a psychological appeal for many private buyers.

A breakup is cosmetic, and the story underneath is what really matters. What matters most is ServiceNow’s ruthless execution, its growing AI prowess, and the powerful growth engine propelling it, not just the math of the stock split.

As of the date of publication, Sristi Suman Jayaswal had (neither directly nor indirectly) any positions in the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com