Should You Buy ServiceNow Stock Instead of UiPath Stock? | NOW Stock Analysis | PATH Stock Analysis

SUMMARY

Parkev Tatevosian, CFA, evaluates ServiceNow and UiPath, two software companies whose stocks have declined sharply in 2026 amid concerns over artificial intelligence disrupting their business models. The analysis compares their revenue, profitability, and valuation metrics to determine which stock presents a better investment opportunity at current prices.

MAIN POINTS

• ServiceNow and UiPath stocks are both down around 30% in 2026 due to fears of disruption from generative AI. [0:00]
• ServiceNow outperforms UiPath in both total revenue and revenue growth, with $14 billion in revenue and 20% growth compared to UiPath's $1.7 billion and 10% growth. [1:01]
• While ServiceNow has a higher operating profit margin, UiPath has shown significant improvement in profitability and return on invested capital. [2:02]
• Both companies are trading at historically low forward price-to-earnings ratios, reflecting investor concerns about AI risks. [4:01]
• Discounted cash flow valuations suggest both stocks are undervalued, with ServiceNow appearing cheaper on this metric despite being more expensive on a forward PE basis. [5:00]
• ServiceNow is identified as the preferred investment over UiPath, ranking near the top of the analyst's current buy list alongside Meta Platforms, McDonald's, and Uber. [7:00]

DETAILED ANALYSIS

ServiceNow and UiPath have experienced significant share price declines in 2026, each falling approximately 30% amid widespread investor concerns that advances in generative artificial intelligence could undermine their core businesses. ServiceNow maintains a clear lead over UiPath in terms of both scale and growth, generating about $14 billion in revenue over the trailing twelve months compared to UiPath's $1.7 billion, and growing at a 20% annual rate versus UiPath's 10%. This larger scale embeds ServiceNow more deeply within enterprise clients, potentially offering greater resilience against technological disruption.

Profitability metrics reveal a nuanced picture. ServiceNow boasts a higher operating profit margin at 14.8%, but UiPath has made remarkable progress, improving from a deeply negative margin in 2022 to 6.28% currently. In terms of return on invested capital, UiPath leads with 17%, up from -30% in 2022, while ServiceNow has improved to 12.7% from 5% over the same period.

Both companies are trending positively, reflecting operational improvements and the asset-light nature of software businesses, which could further enhance returns if growth persists and AI risks are managed.

Valuation analysis indicates that both stocks are trading at unusually low levels. ServiceNow's forward price-to-earnings ratio stands at 25.7, and UiPath's at 15, both near historic lows for these companies. Discounted cash flow models suggest that ServiceNow, trading at $106 per share, is undervalued relative to a calculated fair value of $157, while UiPath, at $11.73, is below its fair value estimate of $15.24.

The depressed valuations reflect investor caution regarding AI-driven disruption, but may also represent an overpricing of these risks.

Considering all factors, both companies are rated as buying opportunities, but ServiceNow is favored due to its superior scale, growth, and embedded enterprise presence. It is highlighted as a top investment candidate alongside other major firms such as Meta Platforms, McDonald's, and Uber. The ongoing debate about the impact of AI on these businesses remains central, with the potential for significant industry shifts in the near future.

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