**ServiceNow (NOW) shares have dropped 41.9% over the past three months**, significantly underperforming the broader Zacks Computer and Technology sector, which fell 1.8%, and the Financial-Miscellaneous Services industry, which declined 15.6%. Concerns regarding short-term growth, rising AI and cloud spending, and risks from recent acquisitions have pressured investor sentiment despite the company’s solid fundamentals.
As of now, ServiceNow’s AI-native products, particularly Now Assist, have gained traction, achieving over $600 million in annual contract value with substantial growth in new contracts. The company is working to leverage an expanding partner ecosystem, including collaborations with Microsoft and OpenAI, to further enhance its AI capabilities and interoperability. Despite this, elevated operating costs and margins under pressure may temper short-term investor confidence.
ServiceNow’s current valuation appears attractive, with a forward price-to-sales multiple of 6.48x compared to the industry average of 13.88x. However, with technical indicators showing a bearish trend, maintaining a hold position on the stock is advisable for investors as growth opportunities exist amidst ongoing challenges.
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