Should You Invest in ServiceNow (NOW)?

Parnassus Investments, an investment management company, released the “Parnassus Core Equity Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund (Investor Shares) fell -2.44% (net of fees) in the quarter, outperforming the S&P 500 Index’s -4.27% return. U.S. equities fell in the first quarter, showing a shift from the robust gains of the previous quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Parnassus Core Equity Fund highlighted stocks such as ServiceNow, Inc. (NYSE:NOW). ServiceNow, Inc. (NYSE:NOW) offers intelligent workflow automation solutions for digital businesses. The one-month return of ServiceNow, Inc. (NYSE:NOW) was -0.99%, and its shares gained 29.84% of their value over the last 52 weeks. On June 25, 2025, ServiceNow, Inc. (NYSE:NOW) stock closed at $1,005.16 per share, with a market capitalization of $208.221 billion.

Parnassus Core Equity Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2025 investor letter:

“We initiated two positions in the Information Technology sector during the quarter: Advanced Micro Devices, a manufacturer of semiconductor devices and electronic components, and ServiceNow, Inc. (NYSE:NOW), which provides software for automating enterprise workflows, after significant share price drawdowns in both cases. As a result of these additions, our underweight in the sector lessened, and our positioning is closer to market weight.

ServiceNow’s product innovation and its ability to streamline and automate complex workflow across functions enable the company to sustain sales growth. Its wide moat, characterized by high switching costs and deep integration into critical enterprise functions, further cements the company’s long-term competitiveness. Market selloffs provided an opportunity to access one of the highest-quality software companies that is reshaping enterprise operations worldwide.”

Was Jim Cramer Right Calling ServiceNow (NOW) an Exception to the Software Last Year?

A team of software engineers at desks working on code for a cutting-edge cloud computing solution.

ServiceNow, Inc. (NYSE:NOW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 106 hedge fund portfolios held ServiceNow, Inc. (NYSE:NOW) at the end of the first quarter, which was 110 in the previous quarter. While we acknowledge the potential of ServiceNow, Inc. (NYSE:NOW) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered ServiceNow, Inc. (NYSE:NOW) and shared the list of best US tech stocks to buy. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of NOW as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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