AI-Powered Chatbots Drive Process Automation Boom: Why ServiceNow Could Lead the Surge

The landscape of enterprise automation is shifting dramatically. Grand View Research projects that robotic process automation will expand at a compound annual growth rate of 43.9% through 2030, with the global market reaching $30.85 billion—representing a staggering 466% increase from 2026 onward. This explosive growth trajectory is reshaping which software stocks investors should watch.

ServiceNow (NYSE: NOW) stands as a compelling player in this automation revolution. The company deploys AI-powered chatbots to handle routine processes and customer support inquiries at scale, eliminating repetitive manual work while enhancing operational efficiency. Unlike traditional scripted chatbots, these systems leverage generative AI to continuously learn and adapt, becoming increasingly valuable to their users over time.

A Business Model Built on Sticky Subscriptions

ServiceNow’s financial foundation reveals why the company commands investor attention. The firm generated $3.4 billion in Q3 2025 revenue, growing 22% year-over-year, with subscription services accounting for $3.3 billion or 97% of total sales. This recurring revenue model provides predictable cash flows and demonstrates enterprise commitment.

The company’s customer retention metrics underscore its competitive moat. A 97% renewal rate (98% excluding one major U.S. federal agency closure) reflects how deeply embedded ServiceNow becomes in client operations. Once enterprises integrate this platform, switching costs become prohibitive, creating durable competitive advantages.

Dominance Across Enterprise Segments

ServiceNow serves nearly 8,400 enterprise clients, including 85% of Fortune 500 companies. This portfolio diversity proved crucial when a significant federal contract ended—the company absorbed this loss without faltering. During Q3 2025, ServiceNow closed 103 deals exceeding $1 million in new annual contract value and ended the quarter with 553 contracts valued above $5 million each, marking an 18% year-over-year increase.

Such metrics demonstrate ServiceNow’s ability to secure substantial, long-term agreements with the world’s largest organizations. The company maintains $11.35 billion in remaining performance obligations, providing visibility into future revenue streams.

The Growth Deceleration Concern

Despite these strengths, concerns warrant consideration. Revenue growth of 22% represents a notable slowdown compared to historical expansion rates. More troubling, net income grew only 16% year-over-year, suggesting pressure on profit margins as the company scales.

ServiceNow’s aggressive acquisition strategy compounds investor skepticism. The $7.75 billion acquisition of cybersecurity firm Armis raised eyebrows about strategic fit, causing shares to plunge 11% upon announcement. The earlier Moveworks purchase reflects a troubling pattern: using acquisitions to fuel top-line growth as organic expansion decelerates. While future synergies could justify these investments, the trend indicates underlying growth challenges that acquisitions mask rather than solve.

Positioning for the AI Automation Wave

The fundamental industry tailwinds remain compelling. As AI chatbots and robotic process automation become more sophisticated, they’ll assume increasingly complex functions across enterprises. ServiceNow’s entrenched position with Fortune 500 clients and proven ability to expand within existing accounts position the company to capture disproportionate market share gains.

The stock has appreciated roughly 1,000% over the past decade, reflecting long-term investor confidence. If recent acquisitions accelerate growth rates and the company returns to historical expansion levels, current valuations could appear attractive in retrospect.

ServiceNow represents neither a pure speculative automation play nor a risk-free holding. The company’s vast enterprise customer base, high retention rates, and industry tailwinds provide downside protection. However, investors should monitor whether management can resume organic growth momentum or whether the company becomes increasingly reliant on acquisition-driven expansion to meet investor expectations.