If you are debating what to do with ServiceNow (NOW) after its recent headline-grabbing moves, you are not alone. The stock lit up investors’ screens this week after two things happened almost back to back: ServiceNow unveiled a sweeping expansion into West Palm Beach to drive AI innovation, and Morgan Stanley issued a bullish upgrade, pointing to the strength of the company’s fundamentals and AI leadership. On top of that, new partnerships with heavyweights like Cloudera and NextEra have only added fuel to the conversation as ServiceNow pushes deeper into AI-powered workflow automation and global markets. This convergence of upgrades and business milestones has rekindled the spotlight on ServiceNow just as enterprise AI adoption seems poised to accelerate.

It is no wonder investor interest is high given how ServiceNow’s shares have moved: the stock is up just over 6% in the past year, with a recent 5% gain in the past month helping to reverse some year-to-date weakness. While momentum has wavered at times, with returns dipping roughly 11% so far this year, big announcements and fresh alliances have revived optimism that the company’s AI strategy is gaining real-world traction. And when you look at the long view, ServiceNow’s three-year total return clocks in at a striking 148%, reflecting the company’s ability to deliver compounding growth for investors who stayed patient through past volatility.

After this flurry of upgrades and business wins, the real question is whether ServiceNow’s stock still offers upside, or if the market has already priced in the next wave of AI-powered growth. What do you think—is there a buying window opening, or is the AI premium already baked in?

Most Popular Narrative: 18.1% Undervalued

According to the most widely followed narrative, ServiceNow’s current share price presents an attractive discount relative to its estimated fair value. This suggests potential upside for investors if analyst targets prove accurate.

Expansion into CRM and industry workflows, supported by AI-powered improvements, could significantly boost earnings by capturing higher-value deals and expanding the company’s addressable market. Strategic growth in the public sector, particularly with government transformation initiatives, positions ServiceNow for substantial long-term opportunities. This could lead to revenue stability and growth amidst uncertain economic conditions.

Want to know the secret sauce behind this bullish price target? The narrative is built on bold forecasts about future profits, margins, and a premium valuation. Are you interested in discovering which aggressive growth assumptions analysts are betting on for ServiceNow’s next chapter? Dive in to uncover what is fueling the case for a higher fair value.

Result: Fair Value of $1,142.59 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ServiceNow’s reliance on U.S. federal contracts and unpredictable global economic conditions could challenge growth and put pressure on its optimistic outlook.

Find out about the key risks to this ServiceNow narrative.

Another View: Looking Through a Different Lens

While analyst forecasts see ServiceNow as undervalued based on future growth trends, another perspective is to benchmark the stock’s valuation ratio against the broader US software industry. This comparison suggests the shares look pricey. Could optimism be setting expectations too high?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding ServiceNow to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own ServiceNow Narrative

If you would rather draw your own conclusions or dig deeper into the data, you can shape your own ServiceNow story in just a few minutes. Do it your way.

A great starting point for your ServiceNow research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.