Down 34% Already in 2026, Is It Finally Time to Buy ServiceNow Stock?
And management is putting its money where its mouth is. ServiceNow repurchased about $597 million of stock in Q4 and said its board authorized an additional $5 billion in repurchases. Management also said in the Jan. 28 update that it had planned an imminent $2 billion accelerated share repurchase.
So where does that leave valuation?
ServiceNow is an exceptional business. Still, uncertainty surrounding AI merits some skepticism toward the stock, even if it is a catalyst for the company for now.
After this sell-off, ServiceNow's price-to-sales ratio is around 8, and its forward price-to-earnings ratio, which measures a stock's valuation as a multiple of analysts' consensus earnings-per-share forecast, is 24.
While ServiceNow's stock no longer looks expensive after its recent sell-off, it doesn't look like a clear buy either. Yes, ServiceNow is a great business, and the buyback is notable. But the stock is still priced for a world in which high growth stays high for the foreseeable future. And while sustained growth like this could be ServiceNow's reality, the fast-changing nature of the AI era introduces uncertainty that arguably merits a discount before the stock is worth buying.
While I'm personally not ready to call ServiceNow stock a buy yet, it may be getting close to a price I'd consider buying at, assuming the company continues to benefit from AI as a catalyst rather than a headwind.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.
Down 34% Already in 2026, Is It Finally Time to Buy ServiceNow Stock? was originally published by The Motley Fool
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