We recently published a list of Long-Term Stock Portfolio: 15 Best Stocks for 15 Years. In this article, we are going to take a look at where ServiceNow, Inc. (NYSE:NOW) stands against other best stocks for 15 years.
Russell Investments believes that 3 features are defining the market outlook for 2025. These include the elevated level of the S&P 500 forward P/E ratio, the potential for further US dollar strength, as well as the direction of the US 10-year Treasury yield. The active equity managers have been challenged by the severe market concentration. The firm opines that a flattening out of such trends— which can be seen due to policy shifts or change in sentiments related to earnings growth and valuations for mega caps — can support active manager outperformance.
Russell Investments remains focused on sectors in which AI adoption has been ramping up, including industrials, healthcare, and consumer goods. As per the firm, companies that leverage AI for productivity improvements remain well-placed to gain a lasting competitive edge and provide healthy returns. Therefore, skilled active managers are required to look for such companies, primarily those that are in less-covered segments of the market.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Sectors Providing Investment Opportunities
With respect to real assets, Russell Investments sees attractive investment opportunities in real estate and infrastructure, mainly sectors that can benefit from the stabilization of long-term interest rates and favorable relative valuations in comparison to other growth assets. The application of AI in real estate, like data centers and healthcare facilities, continues to emerge as a critical growth area. Furthermore, the infrastructure investments continue to gain momentum from energy utilities and pipeline exposures, given the US administration’s emphasis on expanding LNG (liquified natural gas) production.
The firm also believes that an early focus on deregulation and tax cuts would likely be well-received by equity investors. Overall, an expected US soft landing, together with anticipated policy moderation on trade and immigration, creates specific opportunities for well-positioned portfolios, says Russell Investments.
Our Methodology
We sifted through the holdings of iShares Core S&P 500 ETF and shortlisted the companies that have 10-year revenue growth of over ~10%. Next, we selected stocks that were the most popular among elite hedge funds. We have ranked the stocks in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A team of software engineers at desks working on code for a cutting-edge cloud computing solution.
ServiceNow, Inc. (NYSE:NOW)
10-year Revenue Growth: ~32.03%
Number of Hedge Fund Holders: 110
ServiceNow, Inc. (NYSE:NOW) offers software solutions to structure and automate various business processes through a SaaS delivery model. With businesses increasingly looking for AI-powered solutions in a bid to improve efficiency and decision-making, the company’s expanded AI capabilities can fuel significant growth and market share gains. The company’s platform approach and growing AI capabilities can bring opportunities for expansion over and above its traditional IT management stronghold. ServiceNow, Inc. (NYSE:NOW)’s moves into customer service management as well as human resources exhibit its ability to utilise its core technology in adjacent markets.
The company announced that it has signed a definitive agreement to acquire Logik.ai, an industry leader with a modern, AI-powered, and composable Configure, Price, Quote (CPQ) solution. Logik.ai’s capabilities for sales and commerce are expected to expand ServiceNow, Inc. (NYSE:NOW)’s growing CRM footprint as well as empower sales organizations to close deals faster, fuel productivity levels, and witness greater efficiency. Furthermore, the acquisition can drive ServiceNow, Inc. (NYSE:NOW)’s momentum in Sales and Order Management (SOM).
Lakehouse Capital, a Sydney-based investment manager, released its January 2025 investor letter. Here is what the fund said:
“US-based software company ServiceNow, Inc. (NYSE:NOW) delivered another impressive quarterly result. Revenues grew 21% year-on-year in constant currency terms to $2.9 billion and net income grew 30% year-on-year to $384 million. The company’s key performance indicators remained healthy, with their backlog (remaining performance obligations) growing 23% year-on-year to $22.3 billion (i.e. greater than 2x annual revenue) and renewal rates held firm at 98%. As we have noted in the past, the company’s renewal rates are remarkable as not only are they best-in-class, but they are also extremely consistent, typically in the range of 97% to 99%. These industry-leading renewal rates speak to the mission critical nature of the platform and are a key driver of the long-term annuity value in the business. Zooming out, we continue to believe ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”
Overall, NOW ranks 9th on our list of best stocks for 15 years. While we acknowledge the potential of NOW as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than NOW but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.