ServiceNow (NOW) is well-positioned to deliver a favorable Q3 business outcome as channel checks indicate healthy demand, robust activity across AI offerings, and traction in new pricing and packaging tiers, Oppenheimer said in a note Tuesday.

The margin backdrop also appears favorable amid disciplined hiring and productivity initiatives, while hyperscaler migration efforts are likely to turn more supportive for margins in 2027, the brokerage said. The company will report Q3 financial results on Oct. 28.

Adoption of the company's AI products is gaining momentum as clients acknowledge the better predictability with the hybrid pricing model, which could support lifting the 2026 AI annual contract value guidance, according to the note.

The brokerage said it expects the company to exceed current remaining performance obligations estimates in Q3, but upside could be constrained in Q4 amid indications of softer federal spending.

Oppenheimer reiterated its outperform rating on the stock and raised its price target to $165 per share from $140.

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