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    ServiceNow (NOW) Stock Still Looks Like A Bargain As Shares Rose 42%

    Simply Wall St·10/23/2026 08:29:02
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    ServiceNow has ridden a powerful three year share price upswing, which leaves investors asking a simple question as of late 2026: Are the cash flows from its workflow and AI platform strong enough to support where the stock trades today, or are expectations getting ahead of what the business can actually earn in cash terms?

    • The stock has delivered a 42.5% gain over the last three years, which puts real weight on whether the underlying cash generation can keep pace with the enthusiasm baked into the current price.
    • Fresh AI products like the latest EmployeeWorks release and its ToolSmith developer environment may support expectations for future cash flow growth, especially if customers keep adopting higher value automation across security, HR and customer service workflows.
    • What if you looked at ServiceNow through its earnings instead? See why ServiceNow's 97.2x P/E tells a different valuation story.

    The issue now is whether the current share price for ServiceNow is aligned with the cash flows implied by a Discounted Cash Flow (DCF) view over time.

    If you are considering whether ServiceNow’s AI driven cash flows justify its recent 3 year gain, it can help to compare that story with 55 AI infrastructure stocks.

    Is ServiceNow Still Cheap on Cash Flow?

    The Discounted Cash Flow (DCF) model here focuses on what ServiceNow can generate in free cash over time rather than short term earnings swings. On the latest figures, the business produced roughly $4.3b in free cash flow over the last twelve months, and the model assumes this pool of cash keeps growing rather than shrinking.

    Projected cash flows step up meaningfully by 2030 in the 2 Stage Free Cash Flow to Equity model, which helps explain why the DCF output sits substantially above the current share price of $157.00. Because the third generation EmployeeWorks AI launch and its ToolSmith environment give management more ways to monetise workflow automation, the gap between the cash flow view and today’s market pricing may reflect investors waiting to see how much of that potential actually turns into hard dollars. Find out what ServiceNow could be worth using our Discounted Cash Flow (DCF) estimate.

    The ServiceNow Narrative: What Would Justify Today's Price?

    ServiceNow Narratives on Simply Wall St pick up where this valuation puzzle leaves off by spelling out which paths for growth, margins and earnings would need to play out for the stock to be worth materially more or materially less than today's market price. Each Narrative treats fair value as a hypothesis about ServiceNow's business that can be tracked over time, so you can watch how the story holds up as new information arrives on the Community page.

    ServiceNow brings out two sharply different valuation stories, and the community is split on whether cash flows leave a cushion or a tightrope.

    Bull case: 40% undervalued

    "ServiceNow is quietly building the traffic control system, becoming the platform that helps enterprises manage, govern, observe, secure, and operationalize artificial intelligence at scale..."

    Discover why this Narrative puts ServiceNow at 40% undervalued.

    Bear case: 6% overvalued

    "Of course, the stock is not cheap. ServiceNow has traded at premium multiples for years, and investors are already pricing in a lot of future success..."

    Explore why this Narrative puts ServiceNow at 6% overvalued.

    ServiceNow’s valuation still hinges on one missing piece

    Cash flows and market expectations only tell part of the story, because the real leverage point is who is steering ServiceNow and how their pay shapes the choices they make next. See who runs ServiceNow and how they are paid.