ServiceNow surges 6%, Salesforce climbs 4% on government AI deals

David Moadel Fri, July 24, 2026 at 10:38 AM PDT 4 min read

• CRM +3.65%
• NOW +5.95%
• ORCL -1.53%
• NVDA +0.62%
• BAC +1.19%

Quick Read

• ServiceNow (NOW) jumped 6% on its Q2 AI contract milestone, while Salesforce (CRM) gained 4% after landing a $1.6 billion Veterans Affairs Agentforce deal.
• Oracle's $7 billion Pentagon deal reinforces a wave of government AI spending, lifting the IGV ETF, which holds both NOW and CRM as top positions.
• The analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Salesforce didn't make the cut. Grab the names FREE today.

Shares of ServiceNow (NYSE: NOW) are up 6% in Friday midday trading, changing hands at $97.36. Meanwhile, Salesforce (NYSE: CRM) stock is climbing 4% to $162.56 as a wave of federal AI deal flow lifts enterprise software after months of pain.

Sundry Photography / iStock Editorial via Getty Images

The bounce comes off a brutal run. ServiceNow stock is down 40% year to date (YTD), and Salesforce shares have shed 40.5% over the same span. Today's session reads as an oversold rebound with two fresh, name-specific catalysts underneath it.

Both companies sit at the center of a rotation from AI infrastructure names back into application-layer software, where AI is finally translating into recurring revenue rather than raw capex.

ServiceNow's Q2 Beat and Raise Lights the Fuse

ServiceNow reported Q2 FY2026 results Wednesday after the close. Key highlights include:

• Subscription revenue climbed 24.5% year over year (YoY) to $3.88 billion.
• Current remaining performance obligations (cRPO) rose 21% to $13.2 billion.
• AI annual contract value crossed $1 billion ahead of schedule, with agentic-AI production customers up ninefold in nine months.

CEO Bill McDermott stated in the release: "ServiceNow's exceptional Q2 results solidify our position as the fastest-growing major enterprise software and cybersecurity company."

ServiceNow's management raised its FY26 subscription revenue guide to at least $15.755 billion. Security products landed in 16 of the 20 largest deals, driven by Armis, Veza, and the AI Control Tower stack.

Act now: The analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Salesforce didn't make the cut. Grab the names FREE today.

Analyst Reactions

Analysts have been aggressive overall. Research reports from the following firms lifted their ServiceNow stock price targets:

• Bernstein (Outperform, $248)
• Evercore ISI ($160)
• JPMorgan (Overweight, $150)
• Cantor ($141)
• Jefferies ($140)

Additionally, a fresh Bank of America (NYSE: BAC) research note flagged an "overlooked AI advantage" at a $130 Buy rating.

The Bear Case

The bear case has weight, too. UBS cut ServiceNow stock to $110 and Neutral, noting that "demand remains mixed." Notably:

• ServiceNow's Q2 also benefited from federal on-premise revenue pulled forward from Q3.
• The Q3 subscription guide of $3.975 to $3.98 billion sits below the $4 billion Street view.
• ServiceNow's gross margin slipped to 77.9% from 81%.

Salesforce Lands $1.6 Billion Veterans Affairs Deal

Salesforce won a $1.6 billion, three-year Department of Veterans Affairs Agentic Enterprise License Agreement, deploying Missionforce, Agentforce Public Sector, and Agentforce Health across the agency. The stated goal is cutting veteran appointment scheduling from 28 days to minutes.

The award builds on Q1 FY2027 momentum for Salesforce:

• Agentforce ARR reached $1.2 billion, up 205% YoY.
• Combined Agentforce and Data 360 ARR hit $3.4 billion.
• Public Sector Industry Cloud also contributed to growth.