ServiceNow (NOW): Exploring Valuation as Federal GSA Expands Adoption of Its AI Platform

ServiceNow (NOW) just landed a deal that may have caught your eye if you are weighing your next move with the stock. The U.S. General Services Administration signed on for a sweeping OneGov agreement to use ServiceNow’s AI-driven IT platform across federal agencies. This move could make government workflows up to 30% more efficient, all while bundling in substantial discounts for upgrades and broader adoption. This partnership positions ServiceNow as a central player in federal IT modernization, signaling more than just new logos but potential for meaningful growth in public sector business. This news arrives as ServiceNow’s share price has seen some swings over the past year. After a solid rise of nearly 10% in the past 12 months, momentum lost some steam recently with a year-to-date drop of 11%. The stock turned positive in the past month but is still working to reclaim ground from earlier losses. The company is no stranger to big contracts. Recent partnerships in Europe and ongoing platform innovation help keep ServiceNow in the headlines, but this GSA agreement brings added credibility and the promise of more institutional customers in the pipeline. Now the big question is whether the recent government win has set the stage for an attractive entry point, or if investors are already factoring future growth into ServiceNow’s price.

Most Popular Narrative: 17.8% Undervalued

According to the most widely followed narrative, ServiceNow trades well below its estimated fair value, suggesting significant upside potential. Analysts see the stock as undervalued when considering its future earnings and expansion prospects, even after a period of share price volatility.

Expansion into CRM and industry workflows, supported by AI-powered improvements, could significantly boost earnings by capturing higher-value deals and expanding the company’s addressable market. Strategic growth in the public sector, particularly with government transformation initiatives, positions ServiceNow for substantial long-term opportunities. This could potentially lead to revenue stability and growth amidst uncertain economic conditions.

How does ServiceNow’s valuation stack up against the boldest analyst bets? The secret behind the bullish price target: aggressive assumptions about future growth and margins. Want to know which earnings leaps and profit benchmarks have analysts so confident? Explore the details of this narrative and discover the surprising math behind ServiceNow’s supposed discount.

Result: Fair Value of $1,142.59 (UNDERVALUED)

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

However, overseas uncertainty and heavy reliance on U.S. federal contracts could introduce volatility and challenge assumptions behind ServiceNow’s current undervalued thesis.

Find out about the key risks to this ServiceNow narrative.

Another View: What Do Valuation Ratios Suggest?

While some say ServiceNow is undervalued based on its future growth, a look at its price-to-earnings ratio compared to the broader software industry tells a different story. Does this premium signal strength or does it raise red flags?

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

Stay updated when valuation signals shift by adding ServiceNow to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own ServiceNow Narrative

If the current outlook does not align with your perspective or you enjoy digging into the details yourself, you can craft your own full story 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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