ServiceNow, Inc. (NYSE:NOW) was downgraded by Erste Group analyst Stephan Lingnau on July 23 to “Hold” from Buy due to limited upside potential for the stock. The company’s growth momentum for 2025 is slightly lower, despite offering innovative products to enhance productivity levels.

Erste Group’s analysis anticipates ServiceNow’s software revenue from subscriptions to increase by 19% to 19.5% in the second quarter. Operating margin and return on equity are in line with the sector average, but the expected P/E ratio for 2025 is significantly higher, leading to the downgrade.

The valuation assessment by Erste Group led analyst Hans Engel to conclude that the stock’s upside potential is limited for the time being. ServiceNow, Inc. (NYSE:NOW) is a technology company known for its cloud-based software platform for automating business workflows within an enterprise.

While NOW has potential as an investment, Erste Group believes other AI stocks offer greater upside potential and less downside risk. For those seeking undervalued AI stocks, check out the free report on the best short-term AI stock.

Read more at Yahoo Finance: ServiceNow (NOW) Downgraded Due to Limited Upside Potential