**Chicago**: ServiceNow’s 2025 outlook is mixed with a 25.9% YTD stock decline, forex losses, and tariff impacts. Despite this, the firm pushes AI innovations and strategic partnerships, forecasting near 19% subscription revenue growth amid cautious investor sentiment and an overvalued market position.
Chicago-based investment research firm Zacks.com has released an analysis of several high-profile technology stocks featured in its Analyst Blog on 15 April 2025. The blog covers the latest financial developments and market trends impacting companies including ServiceNow (ticker: NOW), Alphabet (GOOGL), NVIDIA (NVDA), and DXC Technology (DXC).
ServiceNow’s stock has experienced significant pressures in 2025, with shares declining by 25.9% year to date. This downturn in performance trails the broader Zacks Computer & Technology sector, which has seen declines of 14.4%, and the more specific Zacks Computers – IT Services industry, down 18.9% during the same period. Factors contributing to ServiceNow’s challenges include a deteriorating macroeconomic climate exacerbated by trade tariffs imposed by former U.S. President Donald Trump on key partners such as China and Mexico. Analyst commentary notes that ServiceNow’s federal business segment is expected to be impacted negatively due to issues related to DOGE, a reference likely to digital currency market volatility or regulatory concerns.
An anticipated adverse foreign exchange (forex) impact of approximately $175 million for 2025 is also projected to dampen revenue growth, alongside a strategic shift by ServiceNow to accelerate adoption of its Agentic AI platform at the expense of immediate subscription revenue gains. As a result, the company expects a slower subscription revenue growth rate during the year.
Despite these headwinds, ServiceNow continues to develop its technology and partnerships aggressively. The recent launch of the Yokohama platform introduces new AI agents targeted at customer relationship management, human resources, and IT workflows to improve operational efficiency and client service delivery. Strategic alliances remain robust, with notable collaboration reported between ServiceNow and leading technology firms such as Alphabet’s Google Cloud, Amazon, Microsoft, and NVIDIA.
In a detailed account from the blog, ServiceNow expanded its partnership with Google Cloud in January 2025, providing customers access to the Now Platform and comprehensive workflow solutions via the Google Cloud Marketplace. Additionally, ServiceNow’s applications in customer relationship management, IT service management, and security incident management became available on Google Distributed Cloud.
ServiceNow’s collaboration with NVIDIA has catalysed the deployment of AI-based agents for telecommunications, using NVIDIA’s AI Enterprise software and the DGX Cloud platform. Last month, an expanded phase of this partnership integrated NVIDIA’s advanced Llama Nemotron reasoning models and AI agent evaluation tools within ServiceNow’s platform to optimise business transformations.
DXC Technology has also partnered with ServiceNow to launch DXC Assure BPM (Business Process Management), combining DXC’s insurance sector expertise with ServiceNow’s unified data platform for streamlined processes.
Corporate growth through acquisition remains a key component of ServiceNow’s strategy, with recent moves including the planned purchase of Logik.ai, a provider of AI-powered Configure, Price, Quote solutions, announced earlier this month. Earlier acquisitions included Quality 360 from Advania, aimed to enhance manufacturing industry solutions, and Moveworks, which broadens the company’s agentic AI capabilities.
Financial guidance for ServiceNow signals cautious optimism. The company forecasts Q1 2025 subscription revenues between $2.995 billion and $3 billion, representing an 18.5% to 19% year-over-year growth on a GAAP basis, with constant currency (cc) growth between 19.5% and 20%. However, forex considerations are expected to reduce revenues by around $40 million sequentially. For all of 2025, subscription revenues are anticipated in the range of $12.635 billion to $12.675 billion, marking growth approaching 19% in GAAP terms and close to 20% on a non-GAAP basis.
Earnings estimates have been revised downward slightly, with the Zacks Consensus Estimate for 2025 EPS set at $16.23 per share, showing a marginal decrease over the last 30 days but still reflecting a 16.59% increase over 2024 figures. ServiceNow has consistently surpassed earnings estimates in the previous four quarters, with an average surprise rate exceeding 7%. Revenue growth estimates remain solid at approximately 18.4% year-over-year, aiming for $13 billion in 2025.
From a market valuation perspective, ServiceNow appears overvalued; its Value Score is rated ‘F’, and it trades at roughly 11.86 times forward 12-month Price/Sales, considerably higher than the sector average of 5.34 times. Technical analysis shows the stock trading below key moving averages, indicating a bearish trend. Consequently, ServiceNow currently holds a Zacks Rank #4 (Sell), advising investors to approach with caution.
The blog emphasises that while ServiceNow’s extensive AI capabilities and strong industry partnerships may drive future growth, current forex challenges and macroeconomic uncertainties present risks. The company’s elevated valuation further complicates its attractiveness for value-oriented investors at present.
Other stocks featured in the blog, including Alphabet, NVIDIA, and DXC Technology, are highlighted for their ongoing developments, though the detailed analyses primarily focus on ServiceNow’s mixed outlook.
Zacks Investment Research, which disseminates these insights, underscored in their publication that past performance does not guarantee future results. The analysis reflects information current as of mid-April 2025 and includes financial projections, strategic company initiatives, and market positioning.
Source: Noah Wire Services
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