ServiceNow: The Hidden Gem in AI Software Stocks

Published Date : 11/06/2025 

While Palantir continues to dominate the market, ServiceNow, a leading AI software company, offers a compelling investment opportunity despite its high stock price. This article explores the potential of a stock split and the company's strong AI-driven growth. 

While shares of Palantir Technologies have surged 69% this year, making it the top-performing stock in the Nasdaq-100 index, another AI software stock, ServiceNow, has underperformed. However, ServiceNow has seen considerable gains over the past year, and its $1,000 stock price might be turning some investors away. This makes now an interesting time for management to consider a stock split.

ServiceNow is a provider of various cloud-based workplace management solutions and IT professional solutions. The company's premium valuation is justified by its strong AI tailwinds and robust growth in the cloud computing sector. With a share price of over $1,000, ServiceNow is a potential candidate for a stock split in the near future.

A stock split involves increasing the number of shares outstanding while proportionally decreasing the share price. For example, in a 10-for-1 stock split, the share price would decrease by a factor of 10, while the number of outstanding shares would increase tenfold. This would not change the company's market capitalization but could make the stock more accessible to retail investors.

Over the last 12 months, ServiceNow's stock price has climbed by 46%, significantly outpacing the 12% and 14% gains of the S&P 500 and Nasdaq Composite indexes, respectively. However, 2025 has been a different story. As of the closing bell on June 6, shares of ServiceNow are down by 3% on the year. This underperformance is somewhat peculiar, as software-as-a-service (SaaS) businesses are generally insulated from tariffs, which have been a major drag on the stock market this year.

One possible reason for ServiceNow's underperformance is analyst concerns about the company's public sector business. There are suspicions that the company's public sector business could be at risk due to the budget-cutting government project known as the Department of Government Efficiency (DOGE). If investors have been panic-selling ServiceNow over DOGE concerns, it's ironic, as Palantir, which derives more than half of its revenue from government contracts, hasn't experienced a similar dynamic.

Despite these concerns, ServiceNow remains a strong player in the AI and cloud computing space. The company's robust AI capabilities and growing demand for cloud-based solutions make it a compelling investment opportunity. Investors should keep an eye on potential stock split announcements and the company's continued growth in the AI sector. 

Frequently Asked Questions (FAQS): 

Q: What is ServiceNow?

A: ServiceNow is a leading provider of cloud-based workplace management solutions and IT professional solutions. It leverages AI to streamline business operations and enhance productivity.

Q: Why is ServiceNow considering a stock split?

A: ServiceNow's high stock price of over $1,000 may be deterring some investors. A stock split would make the stock more accessible to retail investors by reducing the share price while increasing the number of shares outstanding.

Q: How has ServiceNow's stock performed in the past year?

A: Over the last 12 months, ServiceNow's stock price has climbed by 46%, significantly outpacing the S&P 500 and Nasdaq Composite indexes. However, it has underperformed in 2025, down by 3% on the year.

Q: What are the concerns about ServiceNow's public sector business?

A: Analysts are concerned that ServiceNow's public sector business could be at risk due to the budget-cutting government project known as the Department of Government Efficiency (DOGE). This has led to some investor panic-selling.

Q: Why is ServiceNow still a compelling investment despite these concerns?

A: Despite the concerns, ServiceNow remains a strong player in the AI and cloud computing space. The company's robust AI capabilities and growing demand for cloud-based solutions make it a compelling investment opportunity. 

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