ServiceNow (NOW Quick QuoteNOW - Free Report) shares have plunged 25.4% in the past year, underperforming the Zacks Computer and Technology sector’s appreciation of 25.4% and the Zacks Computers IT Services industry’s fall of 19.2%. The underperformance can be attributed to a challenging macroeconomic environment and a slowing subscription revenue growth rate. The company’s fourth-quarter 2025 guidance reflects tightening budgets of the U.S. federal agencies, which is expected to hurt subscription revenues.

ServiceNow raised the 2025 subscription revenue guidance, which is now expected between $12.835 billion and $12.845 billion, suggesting 20% growth on a non-GAAP constant currency (cc) basis and 20.5% on a reported basis from the 2024 reported figure. This is slower than NOW’s subscription revenue growth rate of 23% in 2024. However, subscription revenues (97% of total revenues) have been benefiting from growing demand for its workflows. Will the growing adoption of workflow help ServiceNow stock recover in 2026? Let us find out.

NOW Shares' Performance

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Can AI-Powered Portfolio Aid NOW’s 2026 Prospects?

ServiceNow’s workflows, including technology, ITSM, ITOM, ITAM, security and risk, CRM and industry, and core business workflows, continue to gain traction. The company is rapidly gaining traction among enterprises with its ServiceNow AI Platform. AI Control Tower deal volume
more than quadrupled sequentially in the third quarter of 2025. Increasing consumption of AI Agent Assist bodes well for NOW’s prospects. ServiceNow’s AI products are expected to surpass $0.5 billion in ACV in 2025 and the company remains on track to achieve $1 billion in 2026.

The announced acquisition of Veza is noteworthy in this regard. The deal strengthens NOW’s security and risk portfolios by expanding into identity security, which will help enterprises better understand and control who and what has access to sensitive data, systems, applications and AI assets, significantly reducing enterprise risks.

Veza offers next-generation identity governance capabilities, including access reviews, access requests, centralized access hubs and real-time visibility that legacy tools struggle to deliver. Integrated with ServiceNow’s workflows, knowledge graphs and AI, Veza will enhance the AI Control Tower by governing what AI agents can access and perform.

Rich Partner Base to Boost NOW’s Top-Line Growth

ServiceNow’s expanding partner base includes the likes of NVIDIA (NVDA Quick QuoteNVDA - Free Report) , Microsoft (MSFT Quick QuoteMSFT - Free Report) , Figma (FIG Quick QuoteFIG - Free Report) , Genesys and others. The expanded partnership with NVIDIA introduced Apriel 2.0, the next generation of NOW’s Apriel Nemotron open model family that is post-trained with NVIDIA and ServiceNow provided data and engineered to deliver AI reasoning and multi-modal capabilities to enterprises in a faster, smaller, more cost-efficient footprint. ServiceNow workflows are now getting integrated with the NVIDIA AI Factory for Government reference design to reimagine data center operations.

ServiceNow expanded integrations with Microsoft, including a new one with Microsoft Agent 365 targeted at providing seamless, enterprise-grade orchestration, governance, and collaboration across AI agents and workflows. The expanded partnership connects ServiceNow’s AI Platform with Microsoft 365, Copilot, Foundry and GitHub. These integrations will help enterprises manage autonomous AI agents with unified controls, consistent policies, and end-to-end visibility. The deepening relationship between ServiceNow and Microsoft will now integrate NOW’s AI Control Tower with Microsoft Foundry and Copilot Studio to automatically discover, manage and enforce governance across AI agents running on Microsoft platforms. 

The Figma partnership is helping enterprises bridge the gap between design intent and enterprise execution. Enterprises are linking Figma Design with the ServiceNow AI Platform, which will help teams move more smoothly from design to production, connecting creativity with governance, data and automation.

NOW’s Earnings Estimates Show Mix Trend

The Zacks Consensus Estimate for NOW’s fourth-quarter 2025 reflects downward revision trends. The current-quarter earnings estimate of $4.35 per share has declined by a nickel over the past 60 days and suggests 18.53% growth over the figure reported in the year-ago quarter.

However, 2025 and 2026 earnings estimates reflect positive trends. The Zacks Consensus Estimate for NOW’s 2025 earnings estimate is currently pegged at $17.28 per share, up 2.7% over the past 60 days and suggests 24.14% growth over the 2024 reported figure. The consensus mark for 2026 earnings estimate is currently pegged at $20.15, up 1.6% over the past 60 days and indicates 16.57% growth over the 2025 estimated figure.

NOW Shares Are Overvalued

ServiceNow stock has a Value Score of F, which suggests a stretched valuation at this moment. The stock is trading at a premium, with a forward 12-month price/sales of 11.28X compared with the broader sector’s 6.75X.

NOW's Valuation

Image Source: Zacks Investment Research

Technically, NOW shares are trading below the 50-day and 200-day moving averages, indicating a bearish trend.

NOW Trades Below 50-Day & 200-Day SMAs

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Conclusion

NOW’s expanding portfolio, growing workflow adoption and rich partner base are expected to improve its top-line growth in 2026. However, a challenging macroeconomic environment and a stretched valuation are concerning.

ServiceNow currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to accumulate the NOW stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.