Can NOW's Strong Portfolio & Rich Partner Base Push the Stock Higher?

ServiceNow NOW shares have lost 7.2% year to date compared with the Zacks Computer & Technology sector and the Zacks Computers – IT Services industry’s decline of 8.7% and 10.2%, respectively. The company’s shares fell due to a worsening macroeconomic environment following U.S. President Donald Trump’s decision to levy tariffs on trading partners, including China and Mexico. 

YTD Performance

However, ServiceNow’s expanding portfolio, accretive acquisitions and a rich partner base are positives. At its annual customer and partner event, Knowledge 2025, NOW announced a new solution in collaboration with Amazon’s AMZN cloud computing platform, Amazon Web Services (AWS).

The latest solution is part of the ServiceNow Workflow Data Network ecosystem, aiming to help businesses unify and act on enterprise data more efficiently. Leveraging bi-directional data integration and automated workflow orchestration, the solution enables real-time insights and AI-driven actions across IT, operations, and customer service. 

With enhanced capabilities through Amazon’s AWS Redshift and ServiceNow’s Workflow Data Fabric, the solution accelerates data-driven decision-making. It empowers organizations to automate workflows, ultimately breaking down data silos and driving innovation.

NOW Benefits From an Expanding Partner Base

ServiceNow’s rich partner base includes Amazon, Microsoft, NVIDIA NVDA, Zoom Communications ZM and Vodafone Business, which has been noteworthy. NOW had 72 transactions of more than $1 million in net new annual contract value (ACV) in the first quarter of 2025. The company expanded its customer relationships, reaching 508 customers with more than $5 million in ACV at the end of the reported quarter, which represents 20% year-over-year customer growth.

The company recently expanded its partnership with NVIDIA to introduce the Apriel Nemotron 15B reasoning model and a new data flywheel architecture, enhancing the efficiency, accuracy, and real-time decision-making capabilities of enterprise AI agents. This is achieved by leveraging NVIDIA’s NeMo microservices and GPU infrastructure.

ServiceNow recently collaborated with Zoom Communications to integrate Zoom Communications CX with ServiceNow CRM and IT Service Management, delivering an AI-first solution for customer service and IT support.

In the first quarter of 2025, ServiceNow partnered with Vodafone Business to launch AI-powered service management solutions. This collaboration aims to enhance customer service by enabling faster query resolution, proactive anomaly detection and streamlined tool deployment.

NOW’s Expanding Portfolio Aids Prospect

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 and Cisco.

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.

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.

NOW’s Earnings Estimate Revision Steady

The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $3.53 per share, unchanged over the past 30 days, indicating a 12.78% increase over 2024’s reported figure.

ServiceNow, Inc. Price and Consensus

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

NOW’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.61%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The consensus mark for second-quarter 2025 revenues is pegged at $3.12 billion, suggesting growth of 18.81% over 2024’s reported figure.

How Should You Approach ServiceNow Stock?

ServiceNow stock is overvalued, as suggested by the Value Score of F.

In terms of the forward 12-month Price/Sales, NOW is trading at 14.69X, higher than the Computer & Technology sector’s 5.72X.

Price/Sales (F12M)

ServiceNow’s robust AI portfolio and strong partner base are expected to drive its clientele. However, unfavorable forex amid a challenging macroeconomic environment, stiff competition and lingering concerns related to tariffs is a concern. NOW stock’s stretched valuation makes the stock unattractive for value investors.

ServiceNow currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable time to accumulate the 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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