We recently published a list of the 15 Best Growth Stocks to Buy for the Next 3 Years. In this article, we are going to take a look at where ServiceNow Inc. (NYSE:NOW) stands against other growth stocks to buy for the next 3 years.

On April 29, Dan Ives of Wedbush Securities joined ‘Power Lunch’ on CNBC to discuss his outlook for the tech sector and expressed that tariffs aren’t stopping the AI revolution. According to Ives, the critical question for the sector was whether spending, particularly CapEx, was being maintained. He expressed confidence that CapEx was holding up and predicted that the forthcoming results from big tech companies would serve more as a confidence booster for the market, rather than fueling the existing fears. As some investors are of the idea that concerns about a potential soft patch in the economy remain, there’s a preference for safer investments in insurance and other stable sectors, rather than big tech. However, Ives acknowledged that while uncertainty had been prevalent in recent weeks, his own survey work and field research indicate that AI-related spending stays strong. He noted that, while there were areas of the cloud sector where spending was accelerating, the overall uncertainty would likely result in broad guidance ranges from companies.

Michael Darda, the Managing Director, Chief Economist, and Macrostrategist at ROTH, also believes that AI would generate solid returns in the future. Ives agreed with Darda’s assessment and stated that enterprises were seeing similar advancements and could not afford to leave their AI projects behind without the risk of consequently falling behind. He also pointed out that for companies like those in the MAG7, the AI revolution is a central theme, which is why challenges brought forward by tariffs would not impact the AI revolution as much. Darda changed his outlook from bearish to bullish on tech and AI recently due to his personal experience with AI tools, which he felt had improved over the past year.

Dan Ives reiterated that, despite the uncertainty created by tariffs, the demand for software remained a safety blanket, and spending by hyperscale companies is expected to continue.

Our Methodology

We sifted through financial media reports to compile a list of the top growth stocks to buy for the next 3 years. We then selected 15 stocks with a 3-year revenue compound annual growth rate of over 20%. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024, which was sourced from Insider Monkey’s database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

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

ServiceNow Inc. (NYSE:NOW)

3-Year Revenue CAGR: 22.38%

Number of Hedge Fund Holders: 110

ServiceNow Inc. (NYSE:NOW) provides a cloud-based solution for digital workflows. It operates the Now platform, which is an AI platform for digital transformation ML, robotic process automation, process mining, analytics, and low-code/no-code development tools. It serves a diverse clientele, such as the government and the healthcare & life science sector.

In Q1 2025, ServiceNow’s Technology Workflows segment saw 36 deals over $1 million in net new ACV, which included two deals that exceeded $5 million. These solutions were present in more than half of the company’s top 20 deals. ServiceNow is heavily integrating AI into these workflows with products like ITSM Plus and ITOM Plus, which saw sequential net new ACV growth. For instance, ITOM Plus saw a ~70% increase. The company’s AI-powered Now Assist is also being adopted across these areas.

This adoption has resulted in improvements like Orca’s IT support deflection increasing from 18% to 94% and a 1.5-day reduction in average incident resolution time. On April 25, investment bank Canaccord Genuity increased its price target on ServiceNow Inc. (NYSE:NOW) to $1,075 from $900 while keeping a Buy rating after the company reported stronger-than-expected Q1 2025 results.

Lakehouse Global Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its January 2025 investor letter:

“US-based software company ServiceNow, Inc. (NYSE:NOW) delivered another impressive quarterly result. Revenues grew 21% year-on-year in constant currency terms to $2.9 billion and net income grew 30% year-on-year to $384 million. The company’s key performance indicators remained healthy, with their backlog (remaining performance obligations) growing 23% year-on-year to $22.3 billion (i.e. greater than 2x annual revenue) and renewal rates held firm at 98%. As we have noted in the past, the company’s renewal rates are remarkable as not only are they best-in-class, but they are also extremely consistent, typically in the range of 97% to 99%. These industry-leading renewal rates speak to the mission critical nature of the platform and are a key driver of the long-term annuity value in the business. Zooming out, we continue to believe ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”

Overall, NOW ranks 4th on our list of the best growth stocks to buy for the next 3 years. While we acknowledge the growth potential of NOW, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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