TCW Funds, an investment management firm, published its first-quarter 2026 investor letter for the ‘TCW Concentrated Large Cap Growth Fund.’ A copy of the letter is available to download here. The first quarter was marked by volatility in equity markets, driven by geopolitical tensions, concerns about the private credit sector, a government shutdown, and ongoing AI concerns. During this period, The Fund (I Share) reported a net loss of 11.75%, lagging behind the Russell 1000 Growth Index return of -9.78%. The Fund considers the market’s broadening as a healthy sign and remains confident that the market will eventually recognize the portfolio’s intrinsic value. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, TCW Concentrated Large Cap Growth Fund highlighted stocks like ServiceNow, Inc. (NYSE:NOW). ServiceNow, Inc. (NYSE:NOW) is a cloud-based software company that provides a platform for automating and managing digital workflows. On May 19, 2026, ServiceNow, Inc. (NYSE:NOW) closed at $101.83 per share. One-month return of ServiceNow, Inc. (NYSE:NOW) was -1.20%, and its shares lost 49.83% over the past 52 weeks. ServiceNow, Inc. (NYSE:NOW) has a market capitalization of $105.02 billion.
TCW Concentrated Large Cap Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2026 investor letter:
“Our weakest relative performance during the quarter came from the information technology and healthcare sectors. Shares of ServiceNow, Inc. (NYSE:NOW; 2.60%**) moved lower despite reporting solid quarterly results in late January. Operating margin (33.5%) and EPS (+30% YoY) topped consensus estimates, and cRPO (current Remaining Performance Obligations) grew 20.5% (vs. guidance of +18%). Management’s sequential forward guidance for cRPO was only in-line with consensus estimates, however, and provided ammunition for bears to posit NOW’s three recent acquisitions (Armis, Moveworks and Veza) were a signal that organic growth may be slowing. While we believe the organic growth outlook remains healthy and that all three acquisitions are good strategic fits that help expand NOW’s TAM (Total Addressable Market) and differentiation, the rise of agentic AI led to an abrupt market sell off in many SaaS (Software-as-a-Service) stocks, including NOW. The market’s current view is that well-funded AI labs such as Anthropic and OpenAI will allow enterprises to bypass specialized software, thus reducing the need for NOW’s offerings. Though we recognize the industry is shifting away from seat-based to consumption-oriented pricing structures, we believe the complexity and switching costs for an enterprise migration is misunderstood by the market. Our view remains that NOW is strongly positioned to capitalize on AI monetization given its role as the system of engagement across enterprise workflows. While still somewhat early, NOW’s monetization of AI offerings is impressive (closed 12 Now Assist deals over $1 million in ACV during the quarter, Agent Assist consumption grew 55x since the launch in May 2025, and $600 million ACV for Now Assist). We remain constructive on shares.”
ServiceNow, Inc. (NYSE:NOW) ranks 25 on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 118 hedge fund portfolios held ServiceNow, Inc. (NYSE:NOW) at the end of the fourth quarter, up from 104 in the previous quarter. In the first quarter of 2026, ServiceNow, Inc.’s (NYSE:NOW) subscription revenues increased 19% year-over-year to $3.67 billion. While we acknowledge the risk and potential of ServiceNow, Inc. (NYSE:NOW) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ServiceNow, Inc. (NYSE:NOW) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered ServiceNow, Inc. (NYSE:NOW) and shared the list of stocks making monster moves. In Q1 2026, Polen Focus Growth Strategy increased its holdings in ServiceNow, Inc. (NYSE:NOW), perceiving it as a generative AI beneficiary. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
