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

Core Viewpoint - ServiceNow's shares have declined by 7.2% year to date, underperforming the Zacks Computer & Technology sector and the Zacks Computers – IT Services industry's declines of 8.7% and 10.2% respectively, primarily due to a challenging macroeconomic environment influenced by tariffs imposed by the U.S. government [1] YTD Performance - ServiceNow's stock performance reflects a significant decline compared to its industry peers [1] Expanding Portfolio and Partnerships - ServiceNow is enhancing its portfolio through strategic acquisitions and partnerships, including a new solution developed in collaboration with Amazon Web Services (AWS) aimed at improving enterprise data management [4][5] - The new solution leverages bi-directional data integration and automated workflow orchestration to provide real-time insights and AI-driven actions across various business functions [5][6] - The company has established a strong partner ecosystem, including collaborations with Amazon, Microsoft, NVIDIA, Zoom Communications, and Vodafone Business, which has led to significant customer growth [7][9] AI and Technology Integration - ServiceNow's recent initiatives include the introduction of AI agents in its Security and Risk solutions, enhancing enterprise security and risk management capabilities [11] - The launch of the Core Business Suite aims to streamline operations across departments by automating processes and improving efficiency [12] - The acquisition of Logik.ai is expected to enhance ServiceNow's CRM offerings by integrating advanced AI capabilities [13] Earnings Estimates - The Zacks Consensus Estimate for ServiceNow's second-quarter 2025 earnings is $3.53 per share, reflecting a 12.78% increase from the previous year, with revenues projected at $3.12 billion, indicating an 18.81% growth [14] Valuation Concerns - ServiceNow's stock is considered overvalued, with a forward Price/Sales ratio of 14.69X, significantly higher than the sector average of 5.72X [15][18] - The company currently holds a Zacks Rank 3 (Hold), suggesting a cautious approach for investors [19]