ServiceNow (NYSE:NOW) has experienced significant portfolio-strengthening developments, highlighted by its recent collaboration with SAIC to enhance IT risk management for U.S. agencies. This partnership marks a pivotal move in ServiceNow's push for enhanced operational resilience through AI integration. Over the last quarter, the company saw its share price climb by an impressive 44%, a move highlighted by broader market gains. While the S&P 500 and Nasdaq closed at record highs during three of the past four sessions, ServiceNow's share price surge was also buoyed by solid Q1 results and product advancements, establishing a strong market position amidst a rising tech sector.

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ServiceNow's recent partnership with SAIC could reinforce its competitive positioning, providing a medium for expanding its AI solutions. This move might positively influence its long-term revenue and earnings, despite a temporary slowdown due to the hybrid pricing model. While Q1 results and product advancements have supported its short-term share price, the company's total returns over five years, including dividends, stood at 159.96%. This reflects a strong longer-term performance, significantly exceeding typical market returns.

Over the past year, ServiceNow's stock performance outpaced the US Software industry, which returned 17.8%, indicating its robust market presence. However, as the focus shifts toward AI integration, ServiceNow faces challenges with net margin pressures and revenue headwinds from geopolitical and currency fluctuations. Analysts' price targets provide mixed insights, with the current share price of US$812.7 sitting at a 4.51% discount from the consensus target of approximately US$1,091.82. This represents a crucial juxtaposition, inviting stakeholders to weigh short-term fluctuations against potential long-term benefits.

Insights from our recent valuation report point to the potential overvaluation of ServiceNow shares in the market.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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