Should I Buy ServiceNow (NOW)? Finance YouTuber Analysis

The YouTuber identifies ServiceNow as an 'undiscovered opportunity' in AI orchestration, where its agent orchestrator and Control Tower manage specialized AI agents to reduce costs and prevent runaway AI usage. He notes the stock has been unfairly punished by fears of AI replacing its software business and is still buying after recommending it below $100.

“Service Now, ticker, solves a different part of this problem and is my favorite undiscovered opportunity here. I recommended buying the stock when it plunged below $100 last month, and I'm still buying.”

The YouTuber recommends buying ServiceNow, noting its 18% plunge on earnings was due to delayed, not lost, Middle East deals, which are expected to become a tailwind. The stock is still down significantly from its peak, offering a buying opportunity. Its strong projected revenue growth (20%) and integration of AI and cybersecurity make it a compelling long-term investment, especially given its current valuation is cheaper than its historical average.

“And that 75 basis point headwind is going to become a 75 basis point tailwind for this stock. And here you can see that 18% drop when they did report those earnings. I actually recommended back then on that drop buying the shares.”

The YouTuber bought ServiceNow after a 17% plunge following its earnings report, seeing it as too cheap to ignore. Despite a slight miss on subscription revenue due to Middle East project delays, the company is still forecast for strong sales and earnings growth, trading at a significant discount to its historical price-to-sales ratio and a reasonable P/E.

“Shares are now trading for just 5.4 four times this year's expected sales, a 70% discount to its price to sales last June and for just 20 times on a price toearnings basis. Now, I took advantage of this dip to buy 1300 shares at $85.54 while at the same time selling call options for the July expiration, the $90 strike price.”

The YouTuber believes ServiceNow is cheap after a significant sell-off due to AI replacement fears. He argues that companies are not rushing to replace software vendors with AI, and ServiceNow is forecast for strong sales growth, making it a bargain at its current valuation.

“Service Now, ticker, reports earnings on Wednesday with the shares slammed by those fears that AI will replace those software makers, driving the stock down 40% on the last year. Those fears stand in contrast to the forecast for a strong 20% sales growth this year and next, and for the earnings to reach $5 a share next year.”

The YouTuber is buying ServiceNow, citing its 50% drop from its peak and its current valuation at 6.9 times price-to-sales, which is a 56% discount to its 5-year average of 15 times. Despite 20% revenue growth, which is not the highest, it's considered one of the least expensive when adjusted for growth, making it too good to pass up.

“Okay, leading software uh leading software CRM provider there down 50% from its peak at 20% revenue growth. So not huge revenue growth compared to some of these others but very strong still nonetheless 6.9 times on a price to sales basis.”

The YouTuber suggests ServiceNow is in good value territory after a 41% drop, trading at 10.2 times price-to-sales, which is less than half its historical average. Despite concerns about AI impacting software growth, he believes the full transition will take years, and ServiceNow has an opportunity to be an AI intermediary. The company is expected to maintain strong revenue growth of over 20% and earnings growth of 25%.

“And with earnings expected up even higher at 25% pace this year. Now, if the company does hit that current year revenue forecast, it's going to mean the shares are priced at just 10.2 two times on a price to sales basis, less than half of where they've traded at in the past.”

The YouTuber argues that Service Now is well-positioned to benefit from AI, as it enhances rather than replaces their workflow technologies. Despite a recent sell-off, the company shows strong fundamentals with expected 20% revenue growth and 24% earnings growth, and its valuation has reset to a 35% discount compared to last year.

“Service Now now trades for 13.8 and eight times sales, down from 21 times multiple last year, a 35% discount on a business that is still compounding at nearly 20% annually.”

The YouTuber recommends ServiceNow, which is pushing hard into agentic AI for automating tasks and workflows. While some studies suggest low adoption, the YouTuber argues that professionally developed agentic AI programs from companies like ServiceNow are highly successful, leading to a potential market surprise as enterprises turn to external experts rather than internal development.

“So what we're going to see is really a surprise to the market that no these software companies are not dead. In fact they are building momentum in these agentic AI models.”

The analyst recommends ServiceNow due to its leadership in agentic AI solutions, which help businesses deploy and coordinate AI agents across various functions. Its partnership with NVIDIA enhances its capabilities, and strong growth in large enterprise clients, combined with a forecast of 19% sales growth, makes the stock attractive. Based on a 17 times price-to-sales multiple, the stock is valued at least $1,100 a share.

“On forecast for 2025 sales of $13 billion, almost 19 % growth from last year, the 17 times price-to-sales multiple, the stock is worth at least $1,100 a share.”

The YouTuber recommends ServiceNow as a major player in Agentic AI, citing its comprehensive solutions like AI Agent Studio and Orchestrator. He notes its partnership with Nvidia, strong growth in large enterprise clients, and a projected 2025 sales growth of 19%, valuing the stock at least $1,100 per share.

“On forecast for 2025 sales of 13 billion, almost 19% growth from last year, a 17 times price to sales multiple. The stock is worth at least $1,100 a share.”

ServiceNow is identified as a strong pick, particularly in the next wave of 'Aentic AI'. It passed the 'Rule of 40' test, indicating solid financial performance and growth potential.

“And in that next wave of Aentic AI, it's tough beating Service Now and Salesforce. Both strong picks as well.”

The YouTuber is buying Service Now, a leader in Agentic AI, due to its holistic use cases, pre-built customizable agents, and partnership with Nvidia. He forecasts 19% annual revenue growth and a price target of $1,600 per share, representing a 77% return, noting its relatively inexpensive valuation compared to its historical average.

“Here we see Service Now is trading at just 15 times on a price to sales basis, the least expensive on our list. That's also a 20% discount to the longerterm average of 18.6 times on a price to sales basis that's traded at over the last year.”

Joseph Hogue recommends ServiceNow due to its strong Agentic AI solutions, including AI Agent Studio and Orchestrator, which offer holistic use cases and customizable agents. The company's partnership with Nvidia enhances its leadership in AI, particularly in cybersecurity and telecom, and it has a strong track record of growing large customer relationships. He projects a price target of $1,100 based on 17 times price-to-sales multiple and 19% growth.

“The company's Agentic AI solutions, its AI agent studio and orchestrator help businesses deploy and coordinate agents from onboarding employees to resolving IT issues. And few other companies out there offer this kind of holistic use case.”

The analyst considers ServiceNow a long-term buy, identifying it as a favorite in the Agentic AI theme. He highlights its comprehensive use cases with pre-built and customizable agents, making its product accessible to various companies. The company's integrations with Nvidia's AI enterprise software further strengthen its leadership in what he believes will be a major trend for the rest of the decade.

“This is also one of my favorite stocks in that Agentic theme. And I'll do the full analysis in Wednesday's video, but few other companies offer the kind of holistic use case with pre-built and customizable agents that make the product accessible to any company.”

The analyst is buying ServiceNow, highlighting its competitive advantage in Agentic AI and business automation, with strong market share in IT operations. Sales are projected to grow at a 19% pace, and the stock's valuation at 13 times forward price-to-sales is considered a good deal compared to its historical levels.

“Service Now ticker NO down 25% since the January high. Agentic AI that business automation and assistance that have been the first real use cases in artificial intelligence is just getting started and is going to be the next evolution in the theme.”

The YouTuber recommends ServiceNow as a leader in business automation solutions, noting its strong market share (31%) and consistent revenue growth (21% this year and next). He believes it's driving the revolutionary use of AI in digital transformation, despite its operating margin not being as high as desired, due to aggressive reinvestment for growth.

“Largest on our list is Service Now, ticker NO, already a $183 billion market cap, a leader in business automation solutions through its platform.”

The analyst considers ServiceNow a strong contender that is close to meeting the 'Rule of 40'. It only needs a slight boost in profitability to qualify, suggesting it's a promising investment if that improvement occurs.

“service now TI our no and P Alto networks toer pnw are strong contenders and just need to boost their profitability a few perc to get here”

The YouTuber suggests ServiceNow, citing its leadership in IT software services with a 40% market share and 98% customer retention. The company has shown significant revenue growth (37% annually) and is transitioning from operating losses to profitability, indicating a strong growth trajectory.

“The company has grown revenue by 37 annually and posted a 4.6 operating margin last year from an operating loss in 2018 so this one is just growing into its profitability years.”

The analyst recommends buying ServiceNow due to its strong revenue growth (20% vs. UiPath's 10%) and larger scale, which provides better staying power. Despite being more expensive on a forward P/E basis (25.7 vs. 15), a discounted cash flow model suggests it is significantly undervalued at $106 compared to a fair value of $157. The current valuation already prices in AI disintermediation risks, which the analyst believes are overpriced.

“But if I had to pick one of these two to buy today, it would be ServiceNow. And in fact, ServiceNow is near the top of my list of the stocks that I'm interested in buying right now.”

The analyst views ServiceNow as significantly undervalued, with a discounted cash flow model indicating a fair value of over $158, well above its current price. It boasts higher expected revenue growth than Adobe and improving profitability, along with strong management, justifying a premium valuation.

“I feel ServiceNow is significantly undervalued whether I measure using the forward price to earnings ratio, or whether I measure using discounted cashflow model.”

ServiceNow is the largest position in the YouTuber's portfolio and is currently showing unrealized losses, which is dragging down overall performance. However, he maintains conviction as long as his fundamental thesis holds, believing the stock will 'explode' when it starts to recover, and he is comfortable holding through the downturn.

“Ich weiß z.B., dass Servicen derzeit unrealisierte Verluste hat und dementsprechend die Performance von meinem Portfolio extrem drückt, weil es eben die größte Position im Portfolio ausmacht. Das bedeutet aber auf der anderen Seite, wenn diese Position anfängt zu rennen, dann wird dieses Portfolio explodieren, ne?”

The YouTuber believes ServiceNow has the potential to recover and deliver good returns, positioning it as a key beneficiary of the AI trend. He highlights its workflow automation capabilities and its ability to generate significant revenue from high-priced AI packages, even if AI replaces human jobs.

“Ich persönlich glaube aber, diese drei Unternehmen haben alle das Potenzial sich wieder zu erholen und dann auch gute Renditen abzuwerfen.”

The YouTuber is heavily invested in ServiceNow and believes it's a strong long-term buy. He highlights robust revenue growth, profitability, strong free cash flow, and a growing RPO (Remaining Performance Obligations) as key fundamental drivers. He also emphasizes that ServiceNow's early and deep integration of AI, particularly with its 'Now Assist' product, positions it for significant future growth, turning AI from a potential headwind into a major tailwind. Technically, he notes a recent breakout from a downtrend, suggesting the bottom is in.

“Ich persönlich glaube, die Wahrscheinlichkeit ist stark gestiegen, dass das hier schon das Tief gewesen ist, bei Service Now, also, dass wir quasi dieses Tief hier nicht noch mal sehen werden.”

The YouTuber is currently 'balls deep' in ServiceNow and despite recent stock price drops and being 'fat in the red', he plans to hold. He believes the bearish narratives around AI disruption, 'seed-based pricing' (per-user licensing), and declining margins are either misunderstood or temporary. He argues ServiceNow's focus on large enterprise clients, robust support ecosystem, and strategic investments in AI (like Now Assist and AI Control Tower) will allow it to thrive and potentially accelerate revenue growth, with margins normalizing by 2027. He expects the stock to recover its all-time high within 3-5 years.

“Ich persönlich glaube tatsächlich daran, in den nächsten drei Jahren wird Service Now, das alte alte Allzeit hoch definitiv wieder erreichen und sprechen und deswegen bin ich da auch nach wie vor entspannt.”

The analyst plans to initiate a long-term position in ServiceNow once it reaches their defined target zone, which they anticipate will happen soon given recent price action. They view ServiceNow as a high-quality software company with strong growth in AI-driven enterprise automation. They project significant long-term upside potential, with price targets around $400 per share on a multi-year basis, representing over 470% return.

“Sobald unsere Zielzone hier erreicht wird, werden wir einen Einstieg nach außen kommunizieren an die Abonnenten des Tech 33 Aktienpaketes mit allen Daten, die relevant sind.”

The YouTuber believes ServiceNow is a long-term buy with great opportunities, but expects it to gain significant momentum later, likely in 2027 or 2028. He anticipates a rotation of money into such stocks when the current chip cycle's momentum fades, as they are beneficiaries of the broader AI revolution.

“As far as stocks like Service Now and CRM, those stocks are buys and they've got great long-term opportunities, but those ones might make more of a move in like 27 or 28.”

The YouTuber believes ServiceNow has clearly bottomed and is in an upward cycle. He suggests that as more Wall Street analysts recognize the 'agentic opportunity' for ServiceNow, the stock will gain significant momentum.

“This stock has sh clearly shown it's bottomed, right? And it's in an upward cycle from here. And it's it's interesting because I think just in the past couple weeks here, people are starting to understand the agentic opportunity for Service Now.”

The YouTuber recommends buying Service Now, citing its attractive valuation given its high-teens to low-20s growth rates for years to come. He notes its strong free cash flow per share and historical PE on the floor, suggesting it's undervalued. He also highlights its potential as an AI enterprise operating system, as described by Nvidia's CEO, and its long-term growth opportunity.

“The beautiful thing about Service Now and Salesforce stock is they trade way too cheap given their growth rates.”

The YouTuber believes Service Now will benefit massively from the AI wave, a factor he thinks the market is currently overlooking. He expects the stock to gain significant momentum in one to two years, similar to how he approached AMD when it was out of favor.

“Next one up here, Service Now, is another one. I think they're going to benefit massively from this AI wave. Uh they're not seeing it right now.”

The YouTuber acknowledges Service Now's strong business fundamentals, high gross profit margins, and consistent revenue growth, noting its mission-critical software and CEO's confidence. However, his valuation model suggests the current price offers only a 10% annual return, which he deems insufficient for an individual stock. He would consider buying if the stock price drops to a level that offers a more attractive return.

“So guys, even though a lot of people like it, I'm not really excited about 10% return. I'm going to wait a little bit longer here to get the stock at a at a price that makes more sense to me.”

The YouTuber sees a short-term buying opportunity in ServiceNow if it pulls back to around $120, as it has already shown bullish momentum by crossing its 100-day moving average. He suggests a stop-loss at $103 and a price target of $173, indicating a favorable risk-reward ratio for a swing trade.

“Würde ich die Service Now auf diesem Niveau hier kaufen bei 135 140$? Nein, eher nicht. Hier würde ich ebenfalls ein noch mal ein Drawdown abwarten, der maximal bis 110$ führen sollte. Also ansonsten wäre das schon recht heftiger Rücklauf. dann wäre das positive Momentum schon sehr weit wieder zurückgenommen. Also ich denke bei so 120$, da sollte sie sich im fangen auf der Unterseite und dann hätte man auch wieder ein sehr gutes Chance Risikoverhältnis”

The YouTuber highlights that ServiceNow is being bought by politicians with insider knowledge, its CEO, and even the President, suggesting a strong belief in its future. Despite a recent 50% stock drop due to 'SaaS apocalypse' fears, the company is transforming into an AI platform, with its AI product growing rapidly and a shift to a consumption-based pricing model. Fundamentals show strong revenue growth, cash generation, and high customer retention, with a forward P/E of 14.8 making it appear undervalued compared to its growth prospects.

“Wall Street sees AI as a threat. Service Now sees AI as the biggest growth opportunity in its history. And so far the numbers indicate that they might just be right.”

The YouTuber, who previously sold his shares, advises caution on ServiceNow despite seemingly attractive valuation metrics. He highlights concerns about contracting gross margins due to the shift to AI-driven services, which have higher compute costs, and a potential slowdown in organic revenue growth as indicated by current remaining performance obligations (RPO) when excluding acquisitions. He also notes a slight dip in renewal rates and management's potentially misleading guidance.

“Overall, I do think that Service Now seems like a pretty good deal in terms of valuation, but there's a lot of moving pieces here. And I'm not necessarily a Service Now bear. I don't own shares anymore, but when I see bull calls that don't take into consideration the potential loss of that seatbased gross profit and the growth of now assist, which seems great on the surface, but you have to account for the margin compression. Well, then I don't think we're getting the full picture just to be understood completely of where I'm coming from here.”

The YouTuber sold ServiceNow after realizing that the agentic AI threat was real and could pose an existential threat to the company as models improve and proliferate, despite having bought it earlier.

“As I started to research more, I realized that this agentic threat was real. While it might not be able to orchestrate agents yet, I do believe that as these models improve and increase in their proliferation, it will be an existential threat to service.”

The YouTuber sold Service Now because Claude Co-work can automate repetitive workflows and orchestrate them, directly competing with Service Now's core function at a significantly lower cost. This new competition is seen as eroding Service Now's moat and pricing power, impacting its long-term valuation.

“Co-work can automate repetitive workflows and it may soon help uh orchestrate those workflows, which is exactly what Service Now does.”

The YouTuber classifies ServiceNow as a 'robust' company, believing it will be fine because its deterministic nature and role as a system of record for workflow integration make it less vulnerable to AI. He notes that AI is already integrated and finds its current valuation quite favorable, leading him to own shares.

“AI is used in Service Now. it's plugged into service now in order to do these things and I actually think that it is a quite favorable valuation at this point uh which is why I own shares.”

The YouTuber suggests buying ServiceNow due to its current valuation, trading at a significant discount to its historical price-to-sales, P/E, and price-to-free cash flow ratios. He notes strong future growth indicators like current remaining performance obligations (RPO) growing faster than revenue, and an accelerating number of large customers. Despite some gross margin compression, management's guidance for subscription revenue growth significantly exceeds Wall Street expectations, and a reverse discounted cash flow analysis indicates the current price is justified by a modest 10% revenue growth rate, well below analyst estimates.

“The bottom line is is that it looks like Service Now is um trading at a at a relative discount.”

The YouTuber suggests that the recent sell-off in software stocks like Service Now is an overreaction driven by sentiment rather than fundamentals. They argue that companies are deeply integrated into platforms like Service Now, making short-term replacement difficult due to high switching costs and long-term contracts. The underlying fundamentals, such as revenues, cash flow, and margins, remain stable, presenting a unique buying opportunity at historically favorable valuations.

“Denes, einer der einflussreichsten Technologieanalysten in der Wall Street, bezeichnet den aktuellen Ausverkauf der Software Werte als einzigartige Chance. Er betont, dass Unternehmenskunden viel zu tief in Plattform wie Sales Force oder Service integriert sind, als dass sie diese kurzfristig ersetzen könnten.”

The YouTuber plans to build a position in ServiceNow, citing its market leadership in IT Service Management, high customer retention (98% renewal rate), and consistent revenue growth of 21.8%. With a forward P/E of 32 and expected 21% earnings growth, the PEG ratio of 1.5 indicates fair valuation, especially with anticipated AI integration solidifying its market position.

“Ich denke, dass insbesondere die KI Integration die Marktführerschaft von Service Nowfristig festigen werden und ich werde da jetzt eine Position in dieser Aktie aufbauen.”

The YouTuber considers ServiceNow a quality stock due to its consistent revenue growth (over 20% annually), high subscription renewal rate (98%), and increasing demand for its AI-powered tools like Now Assist. Despite its high valuation (forward P/E of 36.4, P/FCF of 43.8), he acknowledges that some analysts justify this due to its strong growth and market leadership.

“Ich bin eine kleine Position bei Service Nowau eingegangen und bin bereits bei TSMC investiert.”

The YouTuber acknowledges ServiceNow's incredible long-term revenue and cash flow growth (over 20% annually) and low AI disruption risk, as it benefits from AI. However, he finds its current valuation of 35.4 times free cash flow to be on the higher end, suggesting there are better deals in the software space.

“However, I do think that Service Now is looking on the more expensive end, trading for that price to free cash flow of 35.4 and I think that there are better deals in the overall software space.”

ServiceNow is identified as an elite quality business with strong fundamentals, high retention rates, and significant cash reserves. However, the technicals currently show weakness, with the stock trading below its 200-day moving average and lacking strong trend conviction. The analyst would wait for the stock to break above $938 with confirming momentum indicators before buying.

“Or I'd simply wait for it to break above $938. That way, it has stronger momentum confirmation like an ADX above a 20 and positive rock. When those line up, Service Now becomes a buy.”

The YouTuber suggests ServiceNow is a strong buy despite its high P/E ratio, citing its robust revenue growth, improving margins, declining debt-to-assets, and strong operating cash flow. The company's 2025 guidance for AI Data Solutions growth and operating margin exceeds the 'rule of 40' for software companies, with analysts projecting over 27% upside.

“this company is primed for solid stock performance and when we look at the forecast from the analyst they see it with over 27% upside for the year”

ServiceNow has grown significantly by providing outsourced back-office solutions like HR and IT operations, allowing companies to 'land and expand'. The company is now generating substantial profit. The YouTuber considers it a phenomenal business and would be interested in buying if its expensive shares pull back.

“if shares pull back this would be one that I would love to get at a much better value”