ServiceNow: The AI-Driven Growth Machine Poised to Blow Away Q3 Earnings

Investors, buckle up. ServiceNow (NOW) is about to deliver a performance that could make this stock a blockbuster in the AI race. With its AI-driven innovations, explosive RPO growth, and a $3 billion buyback fueling momentum, NOW is primed to outpace expectations in its Q3 report. Let's break down why this cloud software giant is a buy now—before the fireworks begin.

The AI Play That's Not Just Hype

ServiceNow isn't dabbling in AI—it's owning it. The company's AI Agent Studio and Workflow Data Fabric are transforming how enterprises handle IT, HR, and customer service. These tools let businesses build custom AI workflows without coding, unlocking productivity gains that competitors can't match. Partnering with NVIDIA and integrating tools like Moveworks and Logik.ai gives NOW a stacked deck in the AI arms race.

Think of it this way: When a company like Aptiv (a key customer) uses NOW's platform to automate 80% of its IT tickets, that's not just revenue—it's moats being built in real time. And with 72 deals exceeding $1 million in net new ACV in Q1, big enterprise wins are fueling escalating momentum.

RPO Growth: The Fuel in the Tank

Let's talk cold, hard numbers. ServiceNow's Current Remaining Performance Obligations (cRPO) jumped 22% year-over-year in Q1, hitting $10.31 billion. That's cash already committed to future revenue—a gold standard metric for subscription businesses. Pair that with 19% YoY subscription growth ($3.03 billion in Q2 guidance) and you've got a rocket on the launchpad.

This isn't a blip. It's a trend. And with the Q3 consensus at $3.83 EPS (per Street estimates), NOW's RPO backlog suggests it could blow past that number. Remember, the company beat Q2 2024 estimates by 9%—and this is a team that's been overdelivering for years.

The Buyback Boost: $3B in Confidence

CEO Bill McDermott isn't just talking about AI—he's backing it with cold hard cash. The $3 billion buyback authorization announced earlier this year isn't just a shareholder-friendly move. It's a middle finger to Wall Street skeptics who think NOW can't scale AI.

Here's the math: With 156 million shares outstanding and $1.47 billion in net income (as of Q1 2025), this buyback could supercharge EPS growth. Few companies have the cash flow (free cash flow surged 48% YoY to $1.48 billion in Q1) to pull this off.

Earnings Week: Set the Alarms

The Q3 report, expected around October 23 (based on historical patterns), will be a showcase of NOW's AI-driven playbook. Analysts are already anticipating 18.77% revenue growth and 14% EPS growth—but I'm betting on a beat.

Why? Three reasons:
1. AI Adoption Surge: More customers are deploying Agent Studio, which upsells existing contracts.
2. Partnerships Paying Dividends: NVIDIA's infrastructure and Moveworks' conversational AI are creating new revenue streams.
3. Margin Discipline: Operating margins are guided at 27% for Q2—proof NOW can grow and profit.

The Cramer Verdict: Buy NOW Now

This isn't just a tech play—it's a future-of-work stock. With AI integration accelerating, a fortress balance sheet, and a board that's all-in on buybacks, NOW is a rare bird: a high-growth company with the scale to dominate.

Action Item: Buy NOW now, ahead of Q3. Set a price target at $650 (28% upside from current levels) if it crushes estimates. This isn't a trade—it's a seat at the table in the AI revolution.

Risks? Sure—macro headwinds or a product misstep. But with NOW's execution record, I'm betting on fireworks, not flatulence.

Investors, this is how you play the next wave of AI. ServiceNow isn't just a stock—it's a gold mine.

Data as of June 19, 2025. Always consult your financial advisor before making investment decisions.