ServiceNow (NOW) is well-positioned for sustained long-term growth, supported by its expanding role in artificial intelligence, RBC Capital Markets said in a Tuesday note following the company's 2026 Financial Analyst Day.
The analyst said it is a buyer of ServiceNow following a positive event, citing management's projection of $30 billion to $32 billion in subscription revenue by 2030 and AI accounting for about 30% of annual contract value.
RBC also highlighted expectations for sustained double-digit revenue growth, a "rule of 60%+" framework combining growth and free cash flow margins by 2030, along with ongoing margin expansion driven by strong gross margins and operating efficiency.
The firm also pointed to non-seat-based monetization, hybrid pricing, and growth in areas such as security, CRM, and data and analytics as key long-term drivers, while downplaying concerns that DIY approaches and "vibe coding" could materially weaken demand.
ServiceNow's shift toward non-seat-based revenue models, expansion into AI-driven product segments, and focus on organic growth are key factors supporting long-term compounding potential, while the firm views valuation as attractive despite the stock remaining a "show-me" story.
RBC has an outperform rating on the stock with a price target of $121.
Shares of ServiceNow were down 0.3% in Tuesday trading.
Price: $91.52, Change: $-0.45, Percent Change: -0.49%