ServiceNow outvalues Palantir despite both AI stocks sliding

Palantir Technologies and ServiceNow have both experienced sharp stock price declines despite strong business fundamentals. Palantir's stock is down 18% over the past 12 months, while ServiceNow has fallen 51% from recent highs, prompting investors to compare the two AI software firms.

Palantir reported its first-quarter results (ended March 31) with impressive growth: sales increased 85% to $1.6 billion（約2600億円）, and adjusted non-GAAP earnings spiked 154% to $0.33 per share, both easily outpacing Wall Street's consensus estimates. The company's total contract value reached $2.4 billion（約3800億円）, up 61% year-over-year, and it signed 72 deals worth at least $5 million（約8億円） and 47 deals worth at least $10 million（約16億円）. Management raised its 2026 revenue guidance to about $7.6 billion（約1.2兆円）, representing 71% year-over-year growth from 2025. The company is benefiting from an increasing need among companies and government to use AI-infused software to make sense of large datasets.

ServiceNow, by contrast, reported second-quarter results (ended June 30) that addressed investor concerns that AI would replace its core workflow and automation capabilities. Revenue rose 24% to nearly $4 billion（約6400億円）, beating Wall Street's estimate of about $3.9 billion（約6200億円）. Adjusted non-GAAP earnings of $0.90 per share exceeded consensus of $0.86 and were up 11% year-over-year. The company's current remaining performance obligations—contracts to be recognized as revenue in the next 12 months—rose 21% to $13.2 billion（約2.1兆円）. ServiceNow also reported 123 transactions with contract values exceeding $1 million（約1.6億円）, up 40% from the year-ago quarter. CEO Bill McDermott told CNBC, "There's going to be more AI. There are going to be more incidents, and all these things drive increasing volume to ServiceNow." The company raised its full-year guidance, calling for subscription revenue to rise more than 23% to over $15.8 billion（約2.5兆円）, citing growing business volume driven by AI.

The key distinction lies in valuation. Palantir trades at a price-to-earnings ratio of about 140, compared to ServiceNow's 60. The average P/E ratio for the tech sector is currently 41. While Palantir's sales are expanding and the company continues to sign large deals, its valuation appears stretched. ServiceNow's second-quarter results demonstrate that customers continue to choose its automated services despite past fears of AI disruption, and with shares significantly cheaper than Palantir's, ServiceNow appears the better AI software stock at current prices.

Both Palantir and ServiceNow are capturing growth from the same underlying trend: companies and governments increasingly need AI-infused software to process large datasets and manage their expanding AI operations. Palantir's first-quarter results—with sales up 85%, adjusted earnings up 154%, and total contract value up 61% to $2.4 billion（約3800億円）—demonstrate the company's momentum in this market. ServiceNow, meanwhile, has quieted investor worries that AI would displace its core workflow and automation features; instead, CEO Bill McDermott argues that greater AI adoption will drive more need for ServiceNow's platform to manage AI-related incidents and volume.

The investment case hinges on valuation, not growth quality. Palantir trades at a P/E ratio of about 140, nearly double ServiceNow's 60, and both premiums exceed the tech sector average of 41. ServiceNow's second-quarter revenue beat Wall Street estimates and its current remaining performance obligations (contracts recognized as revenue in the next 12 months) rose 21% to $13.2 billion（約2.1兆円）, signaling sustained demand. Large enterprise deals—transactions worth $1 million（約1.6億円） or more—grew 40% year-over-year to 123 deals, suggesting that despite AI's disruption potential, companies still need ServiceNow's features to scale and manage their operations. Given that both companies show strong growth but ServiceNow commands a significantly lower multiple, the article concludes that ServiceNow presents better value for investors at current prices.

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