
ServiceNow Trades 16% Below 52-Week High: Buy, Sell or Hold the Stock?
NOW shares have suffered from a worsening macroeconomic environment following U.S. President Donald Trump's decision to levy tariffs on trading partners, including China and Mexico. The company's federal business is expected to suffer from DOGE-related issues. ServiceNow expects unfavorable forex impacts of $175 million for 2025 and back-end loaded federal business is expected to hurt the growth rate.
ServiceNow's strategy to accelerate the adoption of its Agentic AI by foregoing immediate revenues is expected to affect the subscription revenue growth rate in 2025.
NOW Stock's Performance
However, since reporting first-quarter 2025 results on April 23, ServiceNow shares have jumped 24.5%. NOW has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. The company's expanding portfolio, accretive acquisitions and a rich partner base are the key catalysts.
Technically, ServiceNow's stock is displaying a bullish trend as it is trading above both 200-day and 50-day moving averages.
NOW Trades Above 50-day & 200-day SMAs
So, what should investors do with the NOW stock? Let us dig deeper to find out.
Strong Portfolio & Acquisitions Aid NOW's Prospects
NOW's expanding portfolio has been a major driver. In May 2025, ServiceNow introduced its Core Business Suite, an AI-powered solution designed to streamline and transform core business operations, including HR, finance, procurement, facilities and legal, by unifying workflows and automating processes across departments to improve efficiency, reduce time to value and enhance employee experiences.
ServiceNow announced the launch of AI agents in its Security and Risk solutions, transforming enterprise security by enabling self-defending systems, improving response times, and enhancing risk management in collaboration with Microsoft MSFT and Cisco. Expanding its portfolio in May 2025, NOW announced advancements in autonomous IT, introducing agentic AI capabilities on the ServiceNow AI Platform to drive zero outages, zero downtime and zero service desk incidents.
ServiceNow's enterprise workflow automation suite has been gaining traction as enterprises increasingly adopt digital tools to streamline operations across departments. Through the Now platform, ServiceNow supports diverse workflows, ranging from IT service management and customer service to HR, employee experience and app development.
Acquisitions have also played an important role in expanding NOW's portfolio. In April 2025, ServiceNow announced the acquisition of Logik.ai, a company specializing in AI-powered and Configure, Price, Quote solutions. This move is set to bolster ServiceNow's CRM offerings, particularly in sales and order management, by integrating advanced AI capabilities.
ServiceNow's expanding platform is driving enterprise adoption. In the first quarter of 2025, the company reached 508 customers, generating more than $5 million in ACV, representing 20% year-over-year growth. Expanding customer base is driving subscription revenues, which hit $3.01 billion in the first quarter of 2025, reflecting year-over-year growth of 20% in constant currency.
NOW Benefits From Expanding Partner Base
A rich partner base that includes the likes of Alphabet, Amazon AMZN, Microsoft and NVIDIA NVDA is noteworthy. In May 2025, NOW partnered with Amazon's cloud computing arm, Amazon Web Services, to launch a bi-directional data integration solution, enabling enterprises to unify data and trigger AI-powered workflows by connecting ServiceNow with Amazon Redshift.
NVIDIA and NOW collaborated to launch AI agents for the telecom industry. The AI agents were built with NVIDIA AI Enterprise software and the AI platform NVIDIA DGX Cloud. ServiceNow has expanded its partnership with NVIDIA to enhance agentic AI by integrating NVIDIA Llama Nemotron reasoning models and AI agent evaluation tools into the ServiceNow Platform for optimized business transformation.
NOW's Earnings Estimate Revision Shows Upward Trend
The Zacks Consensus Estimate for 2025 earnings is pegged at $16.54 per share, up by a penny over the past 30 days, indicating an 18.82% increase from the 2024 reported figure.
The consensus mark for second-quarter 2025 earnings is pegged at $3.54 per share, up by a penny over the past 30 days, suggesting year-over-year growth of 13.1%.
ServiceNow Stock Seems Overvalued
NOW stock is overvalued, as suggested by the Value Score of F.
In terms of the forward 12-month Price/Sales, NOW is trading at 14.75X, higher than the broader sector's 6.51X.
Price/Sales Ratio (F12M)
Conclusion
ServiceNow's expanding portfolio and strong partner base are expected to drive its clientele, boosting subscription revenues. However, unfavorable forex amid a challenging macroeconomic environment is concerning. NOW's stretched valuation makes the stock unattractive for value investors.
ServiceNow currently has a Zacks Rank #3 (Hold), which implies that investors should stay away from the stock for the time being.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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