ServiceNow Enters AI-Driven Customer Management: A Challenge for Salesforce?

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In the battle of AI agents, competition is intensifying for Salesforce. ServiceNow’s new artificial intelligence-powered platform for customer relationship management is challenging Salesforce’s dominance in the market. CRM software “helps track each interaction you have with a prospect or customer,” according to Salesforce’s own definition. Interestingly, CRM is also Salesforce’s ticker symbol. After years of providing software for managing information technology services and human resources, ServiceNow entered the customer relationship management space in January. Since then, it has strengthened its offerings with several acquisitions, including Moveworks, and revealed new features earlier this month at its Knowledge 2025 showcase in Las Vegas.

“The cost of losing a customer is higher than ever,” ServiceNow CEO Bill McDermott noted during a discussion on May 6. “What we’re trying to do is reinvent the category. And that includes how you order things, how you fulfill that order, and how you manage the customer relationship.”

In July 2024, Jim Cramer asked Salesforce CEO Marc Benioff whether he was concerned about ServiceNow as a competitor. “That’s like saying that Wienerschnitzel is competing with McDonald’s,” Benioff responded, comparing Salesforce to McDonald’s in his analogy. His confidence is supported by IDC data, which shows that Salesforce captured 20.7% of the CRM market in 2024. Other competitors in the CRM space include Microsoft, which has offerings within its Dynamics 365 platform, and Oracle.

It remains to be seen whether ServiceNow can take market share from Salesforce, but the company is experiencing positive momentum following last month’s earnings results.

ServiceNow’s stock surged 15% after earnings on April 24, climbing back above $1,000 per share on May 12. Shares were down just over 3.5% year to date. On ServiceNow’s post-earnings call, McDermott mentioned that “CRM and industry workflows continued their momentum in 16 of our top 20 deals, with nine deals exceeding $1 million.” Meanwhile, Salesforce shares, although experiencing a slight uptick since late April, were down 13% year to date, hovering around $289.

Questions have arisen concerning Salesforce’s focus on Agentforce, its AI initiative. D.A. Davidson downgraded Salesforce to a sell-equivalent rating last month, citing concerns that Salesforce is neglecting its core business “to pursue a premature AI opportunity.” Benioff addressed this downgrade in a recent interview, stating, “Agentforce is not some separate product,” and emphasized, “We have pivoted our company quickly to fully integrate Agentforce into all of our products.”

The competition between ServiceNow and Salesforce in the CRM arena centers on services-based call centers, particularly which company’s AI agents can better deflect calls to self-serve or digital options, according to Barclays analyst Raimo Lenschow. “Whoever builds the better agents is going to win this,” Lenschow said, noting that it’s crucial for Salesforce to safeguard its position. Salesforce’s extensive industry expertise and large customer base present significant advantages. For ServiceNow, this opportunity represents a clear ROI (return on investment) situation, he added.

To enhance its AI endeavors, ServiceNow announced an expanded partnership with Nvidia, launching Apriel Nemotron 15B, a reasoning model tailored for real-time workflow execution. McDermott mentioned that both he and Nvidia CEO Jensen Huang envision a company capable of operating efficiently even if all employees were absent on the same day, stating, “We’re building the autonomous company.”

Salesforce, too, has been advancing its AI strategies, having announced its collaboration with Nvidia back in September to develop AI agents. The first version of its Agentforce was launched in October, followed by updates in February and April. During its fiscal 2025 fourth-quarter earnings call in February, Salesforce reported 3,000 paying Agentforce customers. The company is set to report its fiscal 2026 first quarter results on May 28, with key areas of interest including maintaining its core business, progress in Agentforce, and continued cost discipline.

Jim has expressed confidence in Agentforce and in Salesforce’s long-term business strategy.

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