Key Points
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ServiceNow said its AI products crossed $1 billion in annual contract value in the second quarter of 2026.
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Reaching $3 billion before 2029 implies about 55% annual growth.
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Management’s own 2030 targets call for AI to reach 30% of the company’s total annual contract value.
When ServiceNow (NYSE:NOW) released its second‑quarter results in July, one figure stood out amid otherwise solid performance: its AI‑driven offerings surpassed $1 billion in annual contract value (ACV), representing the yearly total of signed agreements.
Although $1 billion represents only a fraction of the projected $16 billion in subscription revenue for the year, it remains one of the most rapidly expanding segments of the company.
I forecast that ServiceNow’s AI segment will grow to $3 billion in annual contract value prior to 2029. Below is a deeper look at the factors supporting this outlook.
Image source: Getty Images.
A new billion-dollar business
The AI segment’s growth has been steep. In Q4 2025, ServiceNow reported that net new annual contract value for Now Assist, its generative AI offering, more than doubled compared with the prior year.
The number of customers spending over $1 million yearly on Now Assist rose by more than 130% in Q1, and in Q2 ServiceNow announced that its AI business had surpassed the $1 billion ACV threshold.
Adoption of its autonomous AI agents continues to accelerate.
“Agentic deployments of ServiceNow AI surged ninefold in just nine months,” noted chairman and CEO Bill McDermott in the Q2 earnings release.
The underlying platform remains strong. Q2 subscription revenue totaled roughly $3.9 billion, a 24.5% increase year‑over‑year. Management lifted its full‑year subscription revenue guidance to a range of $15.76 billion–$15.78 billion, marking the second upward revision this year after an initial outlook near $15.5 billion. Additionally, ServiceNow closed 123 deals each exceeding $1 million in net new ACV during the quarter, reflecting nearly a 40% increase compared with the prior year.
“AI‑driven net new ACV growth continues to exceed expectations,” said President and CFO Gina Mastantuono in the same release.
Management’s own target is bigger
To triple the $1 billion AI base by the end of 2028, the company would need roughly 55% annual growth over two and a half years. In absolute terms, that translates to an average of about $800 million in new AI contract value each year. Distributed across the nearly 500 multi‑million‑dollar deals ServiceNow typically signs each quarter‑based pace, that works out to roughly $1.6 million of AI value per deal — a figure that declines as deal volume expands by close to 40% annually.
That is an ambitious trajectory, yet Management’s own goals are even more aggressive.
At its May Financial Analyst Day, ServiceNow unveiled 2030 objectives calling for over $30 billion in subscription revenue with AI contributing 30% of total annual contract value. Although the firm does not disclose a total ACV figure, achieving a 30% AI share on a $30 billion subscription base would require AI‑related ACV well above $3 billion by 2030, implying that the $3 billion milestone will be reached en route.
In essence, my forecast simply expects ServiceNow to follow the trajectory it has already laid out.
Deployments aren’t dollars yet
It’s important to note that the ninefold increase reflects the number of agent deployments, not the associated revenue. A customer may activate many agents initially while committing only modest spend; the projected tripling assumes that heightened usage translates into higher contract values over time.
The comparative base is also expanding. Early growth rates were calculated from a modest starting point, and each successive year of the forecast builds on a larger foundation. A downturn in IT spending or increased competition among AI‑agent vendors could dampen the premium growth rate needed to meet the target.
Should the AI segment grow only in line with the company’s overall business, it would reach roughly $1.7 billion by the end of 2028.
That result would still be respectable, although it would fall short of the projected target by a little more than half.
Nevertheless, the latest disclosures indicate that the AI segment is compounding at a rate well above the required pace.
Should the net new AI‑ACV growth decelerate to match the broader business for a couple of quarters, I would revise the target downward. At present, however, I anticipate that ServiceNow’s AI business will exceed $3 billion in annual contract value before 2029.