ServiceNow: Still Trading Richly Above Peers, Correction Is Far From Over

Gary Alexander33.59K FollowersFollow5ShareSavePlay(12min)CommentsSummaryServiceNow remains a "Sell" despite a 40% YTD decline, as valuation premiums persist and growth offers little alpha over peers.AI poses a risk to NOW's core IT service management products, with no meaningful AI-driven growth acceleration evident. Broad layoffs also impact its seat-based products.NOW's aggressive $7.75 billion Armis acquisition and continued headcount expansion signal a lack of expense discipline amid slowing organic growth.The stock's ~5x forward revenue multiple (and inability to be valued on a bottom-line basis) looks expensive versus large-cap peers at ~3x revenue. JHVEPhoto/iStock Editorial via Getty Images Times and trends change quickly in the stock market, and 2026 has brought a sea change to the way investors look at the tech sector. The cloud software stocks that drove much of the post-COVID boom are now some of the mostThis article was written byGary Alexander33.59K FollowersFollowWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.