ServiceNow (NOW) Declined as Guidance Fell Short of Expectations

Aristotle Atlantic Partners, LLC, an investment advisor, released its “Core Equity Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The S&P 500 Index fell 4.27% in the first quarter of 2025, marking a sluggish start to the year for the U.S. equities market. On the other hand, bonds offered a measure of stability, as the Bloomberg U.S. Aggregate Bond Index rose 2.78%. Aristotle Atlantic’s Core Equity strategy returned -5.90% gross of fees (-5.99% net of fees) in the quarter, underperforming the S&P 500 Index’s -4.27% total return. The relative underperformance was due to a mix of security selection and allocation effects. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first-quarter 2025 investor letter, Aristotle Atlantic Core Equity Strategy highlighted stocks such as ServiceNow, Inc. (NYSE:NOW). ServiceNow, Inc. (NYSE:NOW) offers intelligent workflow automation solutions for digital businesses. The one-month return of ServiceNow, Inc. (NYSE:NOW) was -11.16%, and its shares gained 3.28% of their value over the last 52 weeks. On April 21, 2025, ServiceNow, Inc. (NYSE:NOW) stock closed at $755.99 per share with a market capitalization of $161.666 billion.

Aristotle Atlantic  Core Equity Strategy stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2025 investor letter:

"ServiceNow, Inc. (NYSE:NOW) detracted from performance in the first quarter, as the company reported guidance during the fourth quarter earnings call that was below investor expectations. Investors have also begun to incorporate tougher macroeconomic headwinds and negative impacts from the DOGE government spending cuts into their weaker outlook for software revenue growth in 2025."

ServiceNow, Inc. (NYSE:NOW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 110 hedge fund portfolios held ServiceNow, Inc. (NYSE:NOW) at the end of the fourth quarter compared to 78 in the third quarter. In the fourth quarter of 2024, ServiceNow, Inc’s (NYSE:NOW) subscription revenue increased 21% year-over-year to $2.866 billion. While we acknowledge the potential of ServiceNow, Inc. (NYSE:NOW) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered ServiceNow, Inc. (NYSE:NOW) and shared the list of Reddit stocks with high potential. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.