Investment management company Vulcan Value Partners recently released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The firm focuses on improving long-term returns and lowering risk over short-term results. In the quarter, the Large Cap Composite (Net) returned -14.1%, the Small Cap Composite (Net) returned -6.8%, the Focus Composite (Net) returned -19.1%, the Focus Plus Composite (Net) returned -19.1% as well as the All-Cap Composite (Net) returned -13.5%. Throughout 2025 and escalating to the first quarter of 2026, the market is experiencing heightened volatility related to AI’s potential, leading to mispricing of some strong companies. The current market turbulence presents opportunities for long-term investors willing to accept short-term volatility in stable-valued companies and improve the margin of safety. The letter identified businesses into three groups with perceived /real AI disruption risk: Software, Alternative Asset Managers, and indirectly impacted businesses. The firm highlights that its investment strategy aims to leverage this volatility to reduce risk and increase returns in the long term. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Vulcan Value Partners highlighted ServiceNow, Inc. (NYSE:NOW) as a newly added position. ServiceNow, Inc. (NYSE:NOW) is a cloud-based software company that provides a platform for automating and managing digital workflows. On April 21, 2026, ServiceNow, Inc. (NYSE:NOW) closed at $100.14 per share. One-month return of ServiceNow, Inc. (NYSE:NOW) was -2.83%, and its shares lost 38.39% over the past 52 weeks. ServiceNow, Inc. (NYSE:NOW) has a market capitalization of $104.75 billion.
Vulcan Value Partners stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2026 investor letter:
“We purchased two new positions during the quarter: SAP SE and ServiceNow, Inc. (NYSE:NOW). We believe that ServiceNow is also one of the best businesses in the world. ServiceNow automates workflows in large and complex enterprises. Their platform sits on top of all of an enterprise’s data and systems of record. This very unique and enviable position allows ServiceNow to orchestrate and automate work across departments, enterprise wide. To use an analogy, if a large enterprise is an airport, and its multiple software applications are planes, ServiceNow is the control tower coordinating all of these planes/applications. The company has grown from its roots in IT and now has very large businesses in sales and service, HR, finance, supply chain, operations, and security, as well as in industry specific verticals like Financial Services, Healthcare, and Government.
ServiceNow grew revenue 21%, adjusted EBIT 28%, and free cash flow per share 33% in 2025. This growth at scale puts ServiceNow in elite company. Despite the strong performance, the stock is down approximately 40% year to date and 60% since the beginning of 2025. The company has been on our MVP list for over 5 years and has compounded its value at an incredible rate over that period. It has never been materially discounted until recently. We are thrilled to be able to own this wonderful business with a substantial margin of safety…” (Click here to read the full text)
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. 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 best beginner stocks to buy. 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.
