Jim Cramer on ServiceNow: “It Still Has a High Price-to-Earnings Multiple”

ServiceNow, Inc. (NYSE:NOW) is one of the stocks Jim Cramer offered insights on. Highlighting its recent stock split, a caller asked if Cramer likes the stock at the current levels. He replied:

“Well, the problem is that it is a software company and the software companies are being eaten by the hardware, some would say. It still has a high price-to-earnings multiple. I was surprised the stock gave up so many points on Friday. I thought it would bounce back today, and it really didn’t. I think that at 42 times earnings, it’s a PE multiple, it’s still a little too high for me. It is one of the better companies in an industry that is being, well, it’s having a tough time with AI, even though it is an AI leader itself. Odd, huh?”

Photo by Adam Nowakowski on Unsplash

ServiceNow, Inc. (NYSE:NOW) provides a cloud platform that supports digital workflows through AI, automation, low-code tools, analytics, and a set of IT, security, customer-service, and employee-experience products. TCW Concentrated Large Cap Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its third quarter 2025 investor letter:

“Our weakest relative performance during the quarter came from the information technology sector. Shares of ServiceNow, Inc. (NYSE:NOW) (NOW; 5.15%**) moved lower despite reporting strong quarterly results. YoY growth in cRPO (current Remaining Performance Obligations) topped consensus expectations (+21.5% vs. +19.4%) and subscription revenue also beat consensus estimates, driven by net new ACV (Annual Contract Value) outperformance and better than expected on-premise sales. Investor concerns over NOW’s exposure to the U.S. Federal government have been an overhang for the stock, but NOW added six new government logos during the quarter, and the company has embedded conservatism into their guidance for next quarter. New products are showing strength, and AI-embedded SKUs are gaining traction as NOW closed 21 deals with 5+ Now Assist products (and the company closed a $20m deal during the quarter). We believe investors may not grasp the dominance of NOW’s competitive position as a workflow platform that can sit atop all systems of record in a company and provide workflow engines to get things done across multiple systems. ServiceNow is deeply entrenched across enterprises and may be able to serve as the single pane of glass for deploying and managing AI agents. We remain bullish on shares.”

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Disclosure: None. This article is originally published at Insider Monkey.