ServiceNow Stock Climbs 16% in a Month: Hold Tight or Book Profits?

ServiceNow’s NOW shares have rallied an impressive 16.3% over the past month, significantly outperforming both the Zacks Computers - IT Services industry and the broader S&P 500 index, which declined 1.6% and 1.7%, respectively.

The stock has also outperformed other industry players, including Stem STEM, SoundHound AI SOUN and Accenture ACN. Over the same time frame, shares of Stem, SoundHound AI and Accenture have declined by 2%, 6.6% and 9.6%, respectively. STEM, SOUN and ACN are involved in artificial intelligence-driven solutions, using AI technologies to improve business operations.

NOW’s Stock Performance

This strong rally has made investors wonder whether to book profits or keep holding. Here’s why holding NOW stock may still be the better move.

ServiceNow Expands AI Platform to Accelerate Growth

ServiceNow continues to expand its AI platform to accelerate enterprise automation and digital transformation. The company’s ServiceNow AI Platform integrates artificial intelligence, data and workflows into a unified cloud architecture that helps organizations streamline operations, reduce costs and modernize critical business processes. The platform supports multiple workflow categories, including technology workflows, core business workflows, CRM and industry workflows, and creator workflows, enabling enterprises to connect systems, automate processes and build low-code applications across departments within one platform.

A key part of this expansion is embedding AI directly into enterprise workflows, enabling organizations to automate complex decision-making and operational tasks. ServiceNow emphasizes enterprise AI capabilities that move beyond simple AI assistants toward autonomous workflows and agentic AI, allowing businesses to orchestrate processes, improve productivity and deliver faster outcomes. The company’s growing AI portfolio — including products such as Now Assist, Workflow Data Fabric, RaptorDB Pro and CPQ solutions — is seeing strong adoption and helping enterprises deploy AI-driven automation across customer service, IT operations and other business functions.

ServiceNow is also strengthening the ecosystem around its AI platform through strategic partnerships and acquisitions. Collaborations with technology leaders such as Microsoft, OpenAI and Anthropic aim to integrate advanced AI models, copilots and agents into enterprise workflows, improving interoperability and accelerating adoption of AI-powered solutions. At the same time, acquisitions such as Moveworks, along with planned acquisitions of Armis and Veza, are designed to enhance agentic AI capabilities, enterprise search, security visibility and identity governance. Together, these initiatives expand ServiceNow’s AI platform capabilities and position the company to exploit the growing demand for enterprise AI and workflow automation.

NOW Benefits From Large Enterprise Customer Base

ServiceNow benefits from a large and expanding enterprise customer base, which continues to support the company’s long-term growth. As of the end of 2025, the company served more than 8,800 global customers, including over 85% of the Fortune 500, reflecting the strong adoption of its cloud-based platform among large enterprises. These organizations rely on the ServiceNow AI Platform to support digital transformation initiatives and automate workflows across critical business operations.

The company is also seeing deeper engagement from large customers, which is driving higher contract values and recurring revenues. In the fourth quarter of 2025 alone, ServiceNow closed 244 deals worth more than $1 million in net new ACV, highlighting strong enterprise demand for its solutions. The number of customers generating more than $5 million in ACV reached 603, while the number of customers contributing more than $20 million annually grew by more than 30% year over year. These trends indicate increasing adoption of multiple products and broader platform deployments within existing enterprises.

High customer retention and continued enterprise expansion further strengthen ServiceNow’s growth outlook. The company reported a 98% renewal rate, underscoring the mission-critical nature of its platform for enterprise customers.

NOW’s Earnings Estimates Show Positive Trend

The Zacks Consensus Estimate for NOW’s first-quarter 2026 reflects upward revision trends. The current-quarter earnings estimate of 95 cents per share increased by 3 cents over the past 60 days and suggests 17.28% growth over the figure reported in the year-ago quarter.

NOW’s 2026 earnings outlook also remains strong. The Zacks Consensus Estimate for NOW’s 2026 earnings estimate is currently pegged at $4.13 per share, up 2.5% over the past 60 days and suggests 17.66% growth over the 2025 reported figure.

Short-Term Challenges for NOW

ServiceNow faces a few near-term challenges despite strong demand for its AI platform. A shift from self-hosted deployments to hosted and hyperscaler-based offerings is expected to create about a 150-basis-point headwind to subscription revenue growth in the first quarter of 2026. Additionally, currency fluctuations and broader macroeconomic uncertainties could affect reported financial performance. Integration and regulatory processes related to recent acquisitions, including Moveworks, Veza and Armis, may also pose short-term execution challenges.

NOW continues to trade below the 50-day and 200-day moving averages, indicating a bearish trend.

NOW Trades Below the 50-Day and 200-Day SMAs

Conclusion: Hold ServiceNow Stock for Now

ServiceNow’s expanding AI platform, strong enterprise adoption and rising earnings estimates highlight solid long-term growth potential. While near-term challenges such as macro uncertainty, currency headwinds and integration risks may create some pressure, the company’s strong demand environment and platform expansion support continued momentum. Given these mixed factors, investors may be better off holding NOW stock for now and waiting for further upside as its AI-driven growth strategy continues to unfold.

ServiceNow currently has a Zacks Rank #3 (Hold). 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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