2 Major AI Companies Are About to Report Earnings. Here's Why Investors Should Tune In.
Key Points
In an AI era, ServiceNow's business has been thriving, but its stock hasn't.
Tesla's recent vehicle delivery update highlighted a concerning gap between production and sales.
Both companies are investing heavily in AI, making their upcoming reports critical for investors.
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With earnings season kicking into gear, it is a good time for investors to check in on some of the market's biggest names. And this week, two major companies with significant artificial intelligence (AI) ambitions are scheduled to report their latest quarterly results: ServiceNow (NYSE: NOW) and Tesla (NASDAQ: TSLA).
While these two businesses operate in entirely different industries, they both command premium valuations and are leaning heavily into AI as a catalyst for future growth. Here is a closer look at what to watch when they report earnings later this week.
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ServiceNow
Starting with the enterprise workflow software specialist, ServiceNow is scheduled to report its first-quarter results following the close of the market on Wednesday, April 22.
Looking back, the tech company's fourth-quarter 2025 results showed how it is thriving amid the AI boom. During the period, ServiceNow's subscription revenues reached $3.47 billion, representing a robust 21% year-over-year growth rate.
But the real story was the company's current remaining performance obligations (cRPO), which represent contract revenue expected to be recognized in the next 12 months. This metric climbed to $12.85 billion, up 25% year over year. That is a notable acceleration that outpaced the core subscription revenue growth rate.
Additionally, McDermott aggressively defended the company as an AI beneficiary. This is contrary to a popular bear case that has developed against many software stocks recently, arguing that AI could disrupt them as the agentic AI era makes it easier for new software upstarts to gain momentum and for companies to build their own internal software.
"AI doesn't replace enterprise orchestration. It depends on it. It depends on governance," CEO Bill McDermott explained during ServiceNow's fourth-quarter earnings call.
When ServiceNow reports on Wednesday, investors should keep a close eye on the adoption rate of its generative AI tools. The company's Now Assist product surpassed $600 million in annual contract value during Q4, more than doubling year over year. If ServiceNow can demonstrate that these AI initiatives are driving the company's cRPO year-over-year growth even higher, the stock could be well-positioned to reward shareholders -- even at its current premium valuation.
Tesla
Further, Tesla is also scheduled to post its first-quarter financial results after the market closes on Wednesday, April 22.
The company's previous earnings report showed both positives and negatives.
In its fourth quarter of 2025, Tesla's total revenue reached $24.9 billion, down 3% year over year. But the company's non-GAAP (adjusted) automotive gross margin expanded from 13.6% in the year-ago quarter to 17.9%.
Further, the company's energy business continued to see exceptional growth, with energy generation and storage revenue rising 25% year over year during the period.
"With respect to energy, the Tesla energy team has done incredible work. The growth rate on that work is continuing to be very strong," CEO Elon Musk noted during the company's fourth-quarter earnings call. "We are building more manufacturing capacity and expect that energy will have very high growth for really as far into the future as we can imagine."
But things seem to have gotten more challenging since then.
In a highly anticipated update earlier this month, Tesla released preliminary delivery and production figures for the first quarter of 2026 -- and the numbers were disappointing. The company produced 408,386 vehicles during the period, but it only delivered 358,023.
This means about 12% of the cars Tesla built during the quarter did not reach buyers, suggesting there could be a demand issue.
When Tesla reports on Wednesday, the biggest thing to watch will be how management addresses this inventory build, and what the company says about demand trends for its vehicles. Additionally, investors will likely be looking for concrete updates on the company's capital expenditures, which are projected to exceed $20 billion in 2026 to support its heavy investments in self-driving technology and robotics. With the core automotive business showing weakness, management is under pressure to prove that these capital-intensive investments will ultimately pay off and help catalyze the business.
Overall, both Tesla and ServiceNow offer investors a unique way to get exposure to the AI theme, but in very different ways. During periods of rapid change like we are in today, what these companies' management teams say during their upcoming updates is critical.
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Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends ServiceNow and Tesla. The Motley Fool has a disclosure policy.
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