ServiceNow Drops 30% in a Year: Buy, Sell or Hold the NOW Stock?

ServiceNow NOW shares have plunged 29.9% in the past year, underperforming the Zacks Computer and Technology sector’s appreciation of 25.1% and the Zacks Computers IT Services industry’s decline of 19.1%. The underperformance can be attributed to a challenging macroeconomic environment and a slowing subscription revenue growth rate. The company’s fourth-quarter 2025 guidance reflects tightening budgets of the U.S. federal agencies, which is expected to hurt subscription revenues.

ServiceNow raised the 2025 subscription revenue guidance, which is now expected between $12.835 billion and $12.845 billion, suggesting 20% growth on a non-GAAP constant currency (cc) basis and 20.5% on a reported basis from the 2024 reported figure. This is slower than NOW’s subscription revenue growth rate of 23% in 2024.

NOW Shares Performance

The NOW shares are currently overvalued, as suggested by the Value Score of F. The stock is trading at a premium, with a forward 12-month price/sales of 9.77X compared with the broader sector’s 7.42X.

NOW Shares Valuation

Technically, NOW shares are trading below the 50-day and 200-day moving averages, indicating a bearish trend.

NOW Trades Below 50-Day & 200-Day SMAs

So, how should investors approach the stock right now? Let’s find out.

AI-Powered Portfolio, Rich Partner Base: Factors to Aid NOW

ServiceNow’s workflows, including technology, ITSM, ITOM, ITAM, security and risk, CRM and industry, and core business workflows, continue to gain traction. The company is rapidly gaining traction among enterprises with its ServiceNow AI Platform. Increasing consumption of AI Agent Assist bodes well for NOW’s prospects. ServiceNow’s AI products are expected to surpass $0.5 billion in ACV in 2025, and the company remains on track to achieve $1 billion in 2026.

ServiceNow’s expanding partner base includes the likes of NVIDIA NVDA, Microsoft MSFT, Figma FIG, Genesys and others. The expanded partnership with NVIDIA introduced Apriel 2.0, the next generation of NOW’s Apriel Nemotron open model family that is post-trained with NVIDIA and ServiceNow-provided data and engineered to deliver AI reasoning and multi-modal capabilities to enterprises in a faster, smaller, more cost-efficient footprint. ServiceNow workflows are now getting integrated with the NVIDIA AI Factory for Government reference design to reimagine data center operations.

ServiceNow expanded integrations with Microsoft, including a new one with Microsoft Agent 365 targeted at providing seamless, enterprise-grade orchestration, governance, and collaboration across AI agents and workflows. The expanded partnership connects ServiceNow’s AI Platform with Microsoft 365, Copilot, Foundry and GitHub. These integrations will help enterprises manage autonomous AI agents with unified controls, consistent policies, and end-to-end visibility. The deepening relationship between ServiceNow and Microsoft will now integrate NOW’s AI Control Tower with Microsoft Foundry and Copilot Studio to automatically discover, manage and enforce governance across AI agents running on Microsoft platforms. 

The Figma partnership is helping enterprises bridge the gap between design intent and enterprise execution. Enterprises are linking Figma Design with the ServiceNow AI Platform, which will help teams move more smoothly from design to production, connecting creativity with governance, data and automation.

Acquisitions Expand NOW’s Portfolio

ServiceNow has been expanding its portfolio thanks to frequent acquisitions that included the likes of Logik.io, data. world, Moveworks and others in 2025. While Logik.io provided an AI-powered, composable Configure, Price, Quote solution, data.world is a well-known name in enterprise data cataloging and governance. The Moveworks’ acquisition combined ServiceNow’s agentic AI and intelligent workflows with the former’s intuitive front-end AI assistant, enterprise search and agentic Reasoning Engine.

NOW’s Veza acquisition strengthens security and risk portfolios. Veza offers next-generation identity governance capabilities, including access reviews, access requests, centralized access hubs and real-time visibility that legacy tools struggle to deliver. ServiceNow is also expanding its security portfolio with the Armis acquisition. The company will pay a whopping $7.75 billion in cash for Armis, which is a dominant name in cyber exposure management and cyber-physical security across IT, Operational Technology (OT), medical devices and other fields for companies, governments and critical infrastructure (OT, IoT, Cloud and IoMT) worldwide.

NOW’s Earnings Estimates Show Steady Trend

The Zacks Consensus Estimate for NOW’s fourth-quarter 2025 earnings of 87 cents per share has been steady over the past 60 days and suggests 19.2% growth over the figure reported in the year-ago quarter. The consensus mark for 2025 earnings estimate is currently pegged at $3.46 per share, unchanged over the past 60 days and suggests 24.5% growth over the 2024 reported figure.
 

ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

However, 2026 earnings estimates reflect positive trends. The Zacks Consensus Estimate for 2026 earnings is currently pegged at $4.04, up by a penny over the past 60 days and indicates 16.6% growth over the 2025 estimated figure.

Conclusion

NOW’s expanding acquisition-driven portfolio, growing workflow adoption and rich partner base are expected to improve its top-line growth in 2026. However, a challenging macroeconomic environment and a stretched valuation are concerning.

ServiceNow currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to accumulate the NOW stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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