ServiceNow vs. Adobe: Which Cloud Software Stock Has an Edge Now?

ServiceNow NOW and Adobe ADBE leverage software-as-a-service (SaaS) technologies to offer software that helps enterprises in transforming their businesses. ServiceNow, through its cloud-based platform, offers AI-powered workflow solutions, while Adobe offers creative software, digital documents, and digital experience platforms. However, NOW or ADBE, which of these cloud software stocks has the greater upside potential? Let’s find out.

The Case for NOW Stock

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, Microsoft, Figma, Genesys and others. The company 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.

The Case for Adobe Stock

Adobe is benefiting from strong demand for AI-powered Creative Cloud Pro and Acrobat, as well as AI-first products, Firefly and Acrobat AI Assistant. Through the new conversational and agentic interfaces in Adobe Reader, Acrobat and Express, ADBE is offering improved experiences to business professionals and consumer groups. Firefly models and applications like Photoshop, Illustrator and Premiere, which integrate third-party models, are gaining traction among Creators and Creative professionals. New solutions like Premiere mobile with YouTube integration and Photoshop mobile are helping creators develop content anywhere. 

Adobe is benefiting from an expanding partner base and integrations with leading AI ecosystems, including Amazon Web Services, Azure, Google Gemini, Microsoft CoPilot and OpenAI. Adobe’s Firefly has a rich partner base that includes models from Google, OpenAI, Black Forest Labs, Luma, Runway, Topaz Labs and ElevenLabs. The company has been offering creators a rich set of Gen AI capabilities that allow users to generate with Adobe and partner models. Adobe’s Business Professional and Consumer segment is benefiting from a strong portfolio and an expanding partner base (45 new partners added in the fiscal fourth quarter), including the likes of Bynder, Hootsuite and Sprout Social. 

Adobe now targets annualized recurring revenue growth of 10.2% for fiscal 2026, driven by an innovative AI-powered portfolio, the expanding adoption of enterprises and a large market opportunity. However, Adobe’s AI-related revenues are minuscule compared with Microsoft, Alphabet and Salesforce, which has been a concern for Adobe investors.

Price Performance and Valuation of NOW and ADBE

In the trailing 12-month period, NOW shares have lost a whopping 44.3% while Adobe shares have dropped 33.6%.

NOW vs. ADBE: Share Price Performance

NOW shares are overvalued as suggested by a Value Score of F, while ADBE shares are currently cheap, as indicated by a Value Score of B.

In terms of price/sales, NOW trades at 8.24X higher than Adobe’s 4.52X.

NOW vs. ADBE: Valuation

How Do Earnings Estimates Compare for NOW & ADBE?

The Zacks Consensus Estimate for NOW’s 2026 earnings is pegged at $4.03 per share, which has been steady over the past 60 days, indicating a 16.5% rise from 2025’s consensus mark of $3.46 per share.
 

ServiceNow, Inc. Price and Consensus

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

The Zacks Consensus Estimate for Adobe’s fiscal 2026 earnings is pegged at $23.44 per share, down 9 cents over the past 60 days, indicating an 12% increase over fiscal 2025’s reported figure.

Adobe Inc. Price and Consensus

Adobe Inc. price-consensus-chart | Adobe Inc. Quote

Here’s Why NOW Has an Edge Over ADBE

ServiceNow’s robust AI portfolio, strong partner base and acquisitions are expected to drive its clientele. These factors give NOW an edge over Adobe, as the latter suffers from stiff competition in the SaaS and AI domains.

Currently, both ServiceNow and Adobe carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research