ServiceNow Jumps 25% in 3 Months: Buy, Sell or Hold the Stock?

ServiceNow saw its stock climb 25% over three months, driven by AI momentum that pushed its AI business past $1 billion in annual contract value in Q2 2026, marking sequential growth above 40%. Subscription revenues rose 24.5% year-over-year to $3.88 billion.

Despite the AI traction, Zacks Investment Research assigned NOW a Rank #4 (Sell) rating, citing three headwinds. Competition from MSFT, ORCL, and CRM in enterprise AI and workflow automation is intensifying. Margin pressure from recent acquisitions is squeezing profitability. The stock trades at 8 times forward price-to-sales, a premium multiple that leaves little room for execution missteps.

The divergence between operational strength and valuation risk puts NOW in a tactical squeeze: the company is executing on AI adoption, but the stock has already priced in much of the upside.