ServiceNow’s High-Stakes Pivot: Laying Off Workers While Betting on $30 Billion AI Ambition

ServiceNow is engineering a transformation that cuts both ways. The enterprise software heavyweight has let go several hundred employees, arguing that its own artificial intelligence platform has made those roles redundant. For investors, the move is a stark reminder of what “AI efficiency” actually costs — even as the company simultaneously plots a revenue surge to $30 billion within four years.

The layoffs, which took place in June 2026, underscore the radical nature of the company’s strategic shift. Management describes the new direction as “Agentic AI,” moving beyond simple command-response systems to software that operates autonomously in complex environments. To fund that pivot and tighten operations, ServiceNow is essentially consuming its own product. The token-based consumption model that replaces traditional per-user subscriptions introduces a fresh element of uncertainty into the stock, whose annualised volatility now sits at 79.28% — a level that tests any investor’s nerve.

New Products, Old Price

Despite the internal turmoil, the product pipeline is accelerating. ServiceNow recently unveiled “Action Fabric,” a platform for managing AI agents across different systems, and an “AI Control Tower” that gives corporate clients tools to measure return on investment. At the front end, the AI persona “Otto” will become the primary employee interface, while a suite of pre-defined roles — dubbed “Autonomous Workforce” — is being rolled out. The company expects its specific AI business to generate $1.5 billion in revenue this year alone.

That ambition rests on a strong operational base. In the latest quarter, revenue climbed 22% to $3.77 billion, with earnings per share exactly in line with market expectations. The recurring subscription revenue that long underpinned ServiceNow’s valuation is now being supplemented — and gradually replaced — by consumption-based billing, where clients pay per token. The transition adds a layer of unpredictability that analysts are still trying to model.

The Norges Bank Bet and the Fed Factor

The stock closed Monday at €90.02, up 1.65% on the day but down roughly 9% over the past week. On a monthly basis the picture is marginally brighter: a 1.40% gain. The relative strength index of 48.1 points to a neutral trend, suggesting the market has digested the recent sell-off. Technical analysts describe the current phase as a “repair mode,” still nursing the effects of a security incident that surfaced in early June.

Should investors sell immediately? Or is it worth buying ServiceNow?

Big money is taking a long view. Norway’s Norges Bank recently built a stake worth roughly $2 billion in ServiceNow, a vote of confidence that contrasts with the stock’s short-term wobbles. A broader tech rally tied to a potential US-Iran ceasefire provided some support on Monday, but all eyes are now on the Federal Reserve’s interest-rate decision due Wednesday. Rate-sensitive growth stocks have been particularly vulnerable, and ServiceNow’s elevated volatility — an annualised 79% — leaves it exposed to any hawkish surprise.

Analysts See Upside, but Caution Lingers

Wall Street remains broadly optimistic. The average price target among analysts stands at roughly $142, while Benchmark recently raised its target to $130 with a buy rating. In euro terms, the consensus target is €122.18, implying a potential upside of almost 36% from Monday’s close.

That optimism is supported by a deepened partnership with Nvidia on autonomous agents, as well as a new alliance with IBM to modernise legacy IT systems and unlock fragmented data. The first joint solutions from the IBM tie-up are expected in the second half of 2026.

Still, questions remain. The cost of installing the new AI infrastructure is substantial, and it is far from certain that corporate clients will adopt the token-based pricing model with the same enthusiasm they showed for the old subscriptions. Whether the radical shift to autonomous AI can sustain the high-margin growth that investors have come to expect will be tested in the quarters ahead. For now, the company is pulling every lever it has — layoffs, new products, strategic partnerships — to make the $30 billion target a reality.