ServiceNow (NOW) Stock Gets Slammed on Concerns AI Will Take Over Software

Stock (Symbol)

ServiceNow (NOW)

Stock Price

$106

Sector

Data is as of

Expected to Report

Company Description

ServiceNow, Inc. is a digital workflow company.

The Company helps global enterprises across industries, universities and governments to digitize their workflows.

Its technology platform, Now Platform, enables it to connect systems, silos, departments and processes with digital workflows. It categorizes the workflows it provides into four primary areas, such as information technology (IT), employee, customer, and creator.

Its IT workflows give IT departments the ability to plan, build, operate, and service across the entire IT lifecycle.

Its employee workflows help customers simplify how their employees get the services they need, creating a familiar, consumer-like way to get work done from wherever an employee may be at home, in the workplace or in the field.

Its customer workflows help organizations reimagine the customer experience and increase customer loyalty.

Its creator workflows enable its customers to create, test, and deploy their own applications on the Now Platform. Source: Refinitiv

Sharek’s Take

ServiceNow builds applications that help automate processes and create efficient workflows, to enable work to flow naturally across different departments of a business. Its product portfolio is on a single cloud platform called the Now Platform. Non-tech staff can drag-and-drop interfaces into place on pages and build the platform without the need for a developer. Its Generative AI offering is called Now Assist. NOW’s specialty is working with large organizations, and the company has a niche in government organizations. ServiceNow’s research team is stacked with world-renowned AI experts. NOW introduced new AI platforms, AI Control Tower which acts like a command center, helping people and AI agents work together smoothly and Agent Fabric which links all systems, apps, and data, so tasks across IT, HR, sales, and operations can be automated without problems. Management has the ambition to become the defining enterprise software company of the 21st century. ServiceNow is already an AI leader with more than 1,000 customers in its AI journey.

NOW’s product portfolio includes:

• Information Technology (IT) Workflows — Its flagship suite records IT incidents, solves problems, and automates routine tasks and requests.
• Employee Workflows — products for every stage of an employee’s engagement with an employer. It includes HR services and finance operations.
• Customer Workflows — customer service management for cases and requests, and a field management product for agents out on location, including scheduling and dispatch.
• Creator Workflows — allows clients to easily create, test, and deploy their own applications on the Now Platform.

NOW is one of the best companies in the world. Management stated ServiceNow has the fastest organic growth in the history of enterprise software and the fastest to have ever reached $1 billion, $5 billion, and $10 billion. When I look at the financials, I see revenue has increased on a qtrly basis for years. Management also buys back stock. NOW stock has an Est. LTG of 21% per year and I feel this is a 30% grower. NOW doesn’t pay a dividend, but does buy back stock. NOW is a core holding in the Growth Portfolio. ServiceNow is utilizing AI to capture business.

One Year Chart

NOW stock has been falling since last Summer, with the shares cascading lower the past few months.

NOW has a P/E of 26. My Fair Value is a P/E of 42. 

NOW has an Est. LTG of 21% per year, same as last qtr. This is a very solid growth rate for a large company.

Qtrly profit growth looks good, but just slowed a bit. 25% growth last qtr with 19% expected next qtr. 

Earnings Table

Last qtr, ServiceNow delivered 25% profit growth and beat analyst estimates of 20% growth.

• NOW ended the qtr with 603 customers generating over $5 million in Annual Contract Value (ACV), representing approximately 20% year-over-year growth.
• The company had 244 transactions over $1 million in net new ACV, representing 40% year-over-year growth.
• From an industry perspective, transportation and logistics continued to lead the way with net new ACV growing ~80% year-over-year. Business and Consumer services also posted impressive growth,  ~70% year-over-year followed by financial services growing ~40% year-over-year.
• Now Assist continues to outperform all expectations, surpassing $600 million in ACV. Last qtr, deals greater than $1 million, nearly tripled sequentially and customers spending more than $1 million grew ~40%. The number of deals that include five or more Now Assist products increased by over 10 times year-over-year.

Annual Profit Estimates increased this qtr. For 2026, management expects subscription revenue to be ~$15.55 billion, representing ~20% increase year-over-year.

Qtrly Profit Estimates are for 19%, 16%, 14%, and 24%  growth the next 4 qtrs. Analysts predict ServiceNow’s revenue will grow 21% next qtr. Note revenue grew 21% last qtr, so that’s not slowing growth.

Fair Value

Notice in this table the P/E went from 50 in 2023 to 65 in 2024. That’s a big move, and the stock had to digest some gains in 2025, and go sideways while the P/E came down.

NOW is $106 a share this qtr, and has a P/E of 26.

My Fair Value is a P/E of 35, which is $146 a share, giving the stock upside of 37%.

2027’s Fair Value is $175 a share, giving the stock upside of 65%.

Bottom Line

ServiceNow (NOW) is one of the world’s finest software stocks.

ServiceNow is leading the AI revolution in the software segment. But the stock’s been acting like the company is going away. No way Jose.

NOW moves up from 23rd to 19th in the Growth Portfolio Power Rankings.

I will also place the stock back into the Aggressive Growth Portfolio, where it will rank 14th in the Power Rankings.

Power Rankings

19 of 29

Aggressive Growth Portfolio

14 of 16

Conservative Stock Portfolio

N/A