ServiceNow (NOW) Q2 results will beat consensus due to continued strength in its core offerings and artificial intelligence initiatives, but the company will give conservative guidance to manage macroeconomic uncertainty and a heavy Federal quarter ahead, Truist Securities said in a note on Wednesday.

The Pro Plus stock keeping unit and Agentic AI are showing early momentum, with management realizing uplift in upgrades and broadening use cases across products like IT Service Management Plus and Security Operations Plus, according to the note.

The firm said that ServiceNow's decision to price Agentic AI features on a consumption basis could make adoption easier and increase monetization; however, it is too early to see this impact in 2025 guidance.

Truist expects Federal spending to remain a concern, but recent wins, including $1 million federal deal, show promise, and more deal flow in Q2 could lift full-year guidance.

The firm maintained its buy rating on ServiceNow's stock with a $1,200 price target.

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