ServiceNow (NOW) shares have dropped 29.9% in the past year, underperforming the sector and industry due to a challenging macroeconomic environment and slowing subscription revenue growth. The company’s 2025 guidance reflects tightening U.S. federal agency budgets, impacting subscription revenues. Valuation shows the stock is overvalued, trading at a premium with bearish technical trends.

ServiceNow raised its 2025 subscription revenue guidance to $12.835-$12.845 billion, indicating slower growth than in 2024. The company’s AI-powered workflows and expanding partner base, including NVIDIA, Microsoft, and Figma, are driving growth. Acquisitions like Logik.io and Moveworks are expanding NOW’s portfolio, with earnings estimates showing steady growth trends.

Looking ahead, NOW’s acquisitions, growing workflow adoption, and rich partner base are expected to boost top-line growth in 2026. However, a challenging macroeconomic environment and stretched valuation are concerns. Investors may want to wait for a more favorable point to accumulate NOW stock, which currently has a Zacks Rank #3 (Hold).

Read more at Nasdaq: ServiceNow Drops 30% in a Year: Buy, Sell or Hold the NOW Stock?