Should Investors Buy ServiceNow Stock Instead of Adobe Stock? | NOW Stock Analysis | ADBE Stock

Parkev Tatevosian, CFA•Jun 28, 2026

Summary

Parkev highlights that ServiceNow and Adobe are currently out of favor with investors due to concerns about the potential impact of artificial intelligence on their businesses, leading to lower share prices and attractive valuations. He undertakes a comprehensive comparison of the two companies, evaluating their revenue growth, profitability metrics, valuation, and management.

His analysis revealed the following about each stock:

**ServiceNow (NOW):** Parkev notes that ServiceNow has consistently demonstrated superior revenue growth, with analysts projecting its growth rate to be around 20% in the coming years, more than double Adobe's expected 10%. While it trails Adobe slightly in the cash flow from operations to sales ratio, ServiceNow has shown a more significant improvement trend in this metric over the years. From a valuation perspective, its forward price-to-earnings ratio of 23.6, while a premium to Adobe, is the cheapest the stock has been in several years. Based on a discounted cash flow model, Parkev calculates a fair value of over $158 per share, significantly above its current market price of $97 per share, indicating substantial undervaluation. Furthermore, ServiceNow benefits from a highly regarded CEO, providing a management advantage.

**Adobe (ADBE):** Parkev finds Adobe significantly undervalued, trading at a historically low forward price-to-earnings ratio of 8.209, which is roughly one-third of ServiceNow's valuation. This low valuation is attributed to investor fears about AI's potential impact. Adobe boasts significantly better profitability as measured by return on invested capital (39.6% vs. ServiceNow's 12.71%). Parkev's discounted cash flow model values Adobe at approximately $380 per share, nearly double its current market price of $200 per share. The company, however, faces a notable challenge in management, with a departing CFO and CEO leading to leadership uncertainty.

Ultimately, Parkev concludes that both stocks are significantly undervalued and would make excellent additions to a portfolio. If forced to choose between them, he would narrowly pick Adobe, although he also states that if he were making a new purchase today, given he already owns Adobe, he would likely buy ServiceNow. He emphasizes that the decision is close due to Adobe's deeper undervaluation balanced against its management turnover.

Mentioned Stocks

NOW

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev views ServiceNow as significantly undervalued. It demonstrates superior revenue growth (projected 20% vs. Adobe's 10%) and a better improving trend in cash flow from operations to sales ratio. Its CEO is highly regarded, giving it a management advantage over Adobe. Despite trading at a higher valuation (forward P/E of 23.6) compared to Adobe, this is still the cheapest the stock has been in several years. Based on a discounted cash flow model, Parkev calculates a fair value of over $158 per share, significantly above its current market price of $97 per share. He states it would be an 'excellent addition' to a portfolio and that he would likely buy it if making a new purchase today since he already owns Adobe.

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ADBE

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev considers Adobe significantly undervalued. It trades at a historically low forward price-to-earnings ratio of 8.209, roughly one-third of ServiceNow's valuation, reflecting investor fears about AI. Adobe boasts significantly better profitability as measured by return on invested capital (39.6% vs. ServiceNow's 12.71%). Parkev's discounted cash flow model values Adobe at approximately $380 per share, nearly double its current market price of $200 per share, indicating it is 'significantly undervalued'. While it faces leadership uncertainty with a departing CFO and CEO, Parkev states that if he were starting from scratch and had to pick one, he would choose Adobe due to its deep undervaluation and strong profitability. He also mentions he already owns Adobe stock in his portfolio and calls it an 'excellent addition' to a portfolio.

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