Is ServiceNow (NOW) Undervalued? A Fresh Look at Its Valuation After Recent Momentum

ServiceNow (NOW) shares edged higher recently, climbing 2% on the day. This upward move reflects investor reactions to recent trading momentum and ongoing interest in the company's software automation offerings as markets digest new developments.

See our latest analysis for ServiceNow.

Despite some choppiness in the broader tech sector, ServiceNow's recent rally builds on steady momentum seen throughout the year. While the year-to-date share price return remains negative, long-term total shareholder returns—up almost 125% over three years—suggest that committed investors have been rewarded, even if short-term moves hint at shifting risk perceptions.

If today's momentum has you scanning for more opportunities in the tech space, check out the full list of promising names with our tech and AI stocks screener—See the full list for free..

So with ServiceNow showing strong multi-year growth but a negative year-to-date return, is the current share price a rare chance to buy into future gains? Or has the market already factored in all that upside?

Most Popular Narrative: 17% Undervalued

The current narrative sees ServiceNow’s fair value at $1,143 per share, notably higher than its last close price near $946. This perceived gap reflects expectations around rapid platform expansion and technological edge.

ServiceNow's focus on AI platform and business transformation is gaining momentum. This is expected to drive future revenue growth as demand for AI-driven solutions increases. The acquisition of companies like Moveworks and Logik.ai can enhance ServiceNow’s offerings, potentially improving net margins by driving efficiencies and offering more integrated solutions.

Read the complete narrative.

Want to know which bold financial bets shape this valuation? The story pivots on ambitious growth, tech disruption, and projected margin gains. Curious what powers those headline numbers? Reveal the specific drivers behind this price target in the full narrative.

Result: Fair Value of $1,143 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, global economic headwinds or setbacks integrating new acquisitions could quickly shift sentiment and challenge the bullish case for ServiceNow’s future growth.

Find out about the key risks to this ServiceNow narrative.

Another View: Is the Market Paying Too Much?

Looking from a market multiples perspective, ServiceNow’s price-to-earnings ratio stands at a lofty 118.2x, much higher than the US Software industry average of 33.9x and its peer average of 63.4x. Even compared to its own fair ratio of 50.2x, ServiceNow trades at a considerable premium, signaling investors are paying up for growth that may not materialize as expected. Is this optimism justified, or is the market’s confidence getting ahead of reality?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own ServiceNow Narrative

If these perspectives do not quite align with your own or you are keen to dive deeper, you can craft your own storyline in just a few minutes: Do it your way.

A great starting point for your ServiceNow research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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