After a 50% Drop, Is ServiceNow Stock Worth Buying?
Less than a year ago, ServiceNow stock (NYSE: NOW) was a market darling trading at over $211 a share. Today, it’s hovering around $102. That’s a massive 50% haircut from its peak, even though the actual business hasn’t missed a beat—growing revenues at 20% year after year.
The Identity Crisis
ServiceNow is the “plumbing” of the modern enterprise. They automate the boring but essential stuff: IT helpdesks, HR onboarding, and legal ops. CEO Bill McDermott calls it an “AI control tower,” but essentially, it’s the platform big companies can’t live without. Once a company embeds ServiceNow, they almost never rip it out.
Why The Selloff?
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The stock is down about 31% year-to-date. Why? Fear. Investors are worried that “agentic AI” will replace the human workers that ServiceNow charges per-seat for.
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The Numbers Don’t Lie
The market might be panicking, but the balance sheet isn’t. In Q1 2026, Subscription revenue hit $3.67 billion (up 22%). EPS of $0.97 crushed the $0.80 estimate. In 2025, the company reported total revenue of $13.28 billion with $4.6 billion in free cash flow (up 34%).
Management is targeting $30 billion in revenue by 2030.
Despite this, the stock dropped 18% after the last earnings report simply because the guidance wasn’t “spectacular” enough.
See how ServiceNow’s financials compare to its peers, Datadog, Snowflake, Salesforce, Atlassian, and Workday.
Valuation And AI Reality
At $102, NOW trades at a P/E of 61x. That sounds high, but for context, its seven-year average is over 299x. It’s arguably the cheapest it has ever been relative to its growth.
The AI story is real. New products like ServiceNow Otto and AI Specialist agents are already resolving IT tickets autonomously. Management expects AI to drive 30% of new contract value moving forward.
The Bottom Line
The next big test is the July 22, 2026 earnings call. If you believe AI will destroy enterprise software, stay away. But if you believe ServiceNow is the one actually building the AI tools companies need to survive, the risk-reward at $102 is the most compelling it’s been in years.
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