ServiceNow Stock Could Produce 200%+ Returns - Here's How

Daniel Pronk•Jul 24, 2026

Summary

Daniel argues that ServiceNow's recent earnings report demonstrates a business firing on all cylinders, despite a flat market reaction. Daniel highlights that subscription revenue grew 23% on a constant currency basis and the company raised its full-year guidance, continuing a seven-year streak of under-promising and over-delivering. Daniel points to the fact that ServiceNow AI has already crossed $1 billion in annual contract value as evidence that artificial intelligence is acting as a growth accelerant rather than a disruptor.

ServiceNow (NOW): Daniel states that the company is trading at approximately 22 times trailing twelve months free cash flow, which is its lowest historical valuation multiple. Daniel argues that if the company hits its $30 billion revenue target by 2030, the stock could reach a price of $295, providing a 200% return over five years. Daniel calculates a current fair value of $183 based on a 23.5% compounded annual growth rate, or a more conservative fair value of $140 if growth slows to 18%.

Constellation Software (CSU): Daniel explains that he holds the Constellation family of stocks as his primary software investment because of their superior management and lack of stock-based compensation. Daniel states that these companies are consistently growing above 20% and have significant insider alignment with shareholders. Daniel's conservative DCF analysis for these stocks assumes 13% annual growth and a 17x price-to-free-cash-flow multiple, resulting in a 17% projected annual return.

Daniel concludes that while ServiceNow is highly attractive and undervalued, Daniel is not buying it personally because Daniel's conviction remains higher in the Constellation family of stocks, which already provide sufficient software exposure in Daniel's portfolio.

Mentioned Stocks

NOW

Sentiment: BUYAction: RECOMMENDED

Reasoning: Daniel argues that ServiceNow is a 'screaming buy' based on its valuation, currently trading at its lowest price-to-free-cash-flow multiple ever (around 22x). Daniel states the company beat all Q2 guidance, showing 23% subscription growth and a 98% retention rate. Daniel provides a base-case fair value of $183 and a price prediction of $295 by 2030, representing a potential 200% return.

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CSU

Sentiment: BUYAction: BOUGHT

Reasoning: Daniel states that he chose to buy the Constellation family of stocks instead of ServiceNow because of their exceptional management and insider alignment. Daniel argues that even with conservative estimates of 13% growth and a low 17x exit multiple, these stocks should produce a 17% compounded annual return. Daniel notes that these companies avoid stock-based compensation, which Daniel finds highly attractive.

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