Jim Cramer’s Bullish Bet on ServiceNow (NOW): Riding High with Bill McDermott’s Leadership

Jim Cramer, the outspoken host of Mad Money, has long been a vocal advocate for ServiceNow (NYSE: NOW), the enterprise software giant, and its CEO, Bill McDermott. In recent segments, Cramer has repeatedly praised McDermott’s leadership, calling him “a great jockey” who navigates the company through market turbulence while positioning ServiceNow as a leader in the AI-driven automation revolution. Let’s dissect why Cramer’s confidence in NOW matters—and whether investors should follow his lead.

Why Cramer Loves ServiceNow

Cramer’s enthusiasm for ServiceNow stems from its resilient financial performance and its role in the next wave of enterprise technology. Here’s what the data shows:

1. Dominant Growth Metrics
2. ServiceNow’s revenue grew 14% year-over-year in Q2 2024, outpacing broader IT sector averages.
3. In Q1 2025, the company delivered 18% EPS growth and 21% revenue growth, driving a 16% stock surge amid skepticism about its valuation.

5. AI as a Growth Engine

6. Cramer highlights ServiceNow’s Intelligent Orchestration feature, which uses generative AI to automate IT workflows. This technology has been adopted by major clients like Delta Airlines and Siemens, signaling a shift from cost-cutting tools to revenue-generating innovations.

7. The company’s AI integration has enabled 33% EPS growth in 2024, with Cramer predicting continued monetization in 2025.

8. Institutional Backing

9. ServiceNow ranks 2nd among Cramer’s top stocks, with 110 hedge funds holding the stock as of Q4 2024. This institutional support is critical, as Cramer’s methodology shows hedge-fund-backed stocks outperform the market.

The Case for Bill McDermott’s Leadership

Cramer’s praise for McDermott isn’t just about short-term results—it’s about long-term vision. McDermott has:
- Expanded into critical sectors like healthcare and government, reducing reliance on cyclical industries.
- Built a $20 billion revenue target for 2025, achievable through cross-selling to its Fortune 500 client base.
- Navigated macro headwinds, including U.S.-China trade tensions and federal budget cuts, while consistently raising guidance.

As Cramer noted in a recent segment: “McDermott’s leadership has turned ServiceNow into a nervous system for modern enterprises—no competitor can replicate its ecosystem.”

The Risks: Valuation and Market Skepticism

While Cramer is bullish, he acknowledges two critical risks:
1. High Valuation
- NOW trades at 40x 2026 earnings, a premium to peers like Salesforce (CRM). Cramer advises investors to wait for a PEG ratio closer to 1 before entering.
2. Short-Term Volatility
- ServiceNow’s shares fell 20% in three weeks earlier in 2025, driven by short-seller pressure. Cramer expects this volatility to persist but views dips as buying opportunities.

The Bottom Line: Buy the Dip, but Mind the Valuation

Cramer’s stance boils down to this: ServiceNow is a long-term winner, but investors must be strategic. The stock’s AI-driven moat, cross-selling power, and institutional backing justify its premium valuation for a 5–7 year horizon. However, with NOW trading at 40x forward earnings, now may not be the best entry point.

Key Takeaways:
- Buy Signal: Consider accumulating NOW after a post-earnings dip, aiming for a PEG ratio near 1.
- Hold Signal: Current holders can stay, but monitor macro risks like trade wars and Fed policy.
- Sell Signal: If AI skepticism drags down the stock below $700, or if competitors like BMC Software (BMC) or Atlassian (TEAM) gain traction.

Conclusion

Jim Cramer’s endorsement of ServiceNow isn’t just about today—it’s about the next decade. With 14% annual revenue growth, a $20 billion revenue target, and a platform embedded in 80% of Fortune 500 companies, NOW is a juggernaut in enterprise automation. While its valuation demands patience, Cramer’s track record of prioritizing hedge-fund-backed stocks suggests NOW belongs in any long-term tech portfolio.

As Cramer himself put it: “ServiceNow’s CEO is a great jockey, and this stock is built to win the marathon.” For now, investors should ride the dips—but keep an eye on that PEG ratio.

Data as of May 2025. Past performance does not guarantee future results.