NOW vs. ORCL: Which Digital Transformation Stock Has Greater Upside?

ServiceNow NOW and Oracle ORCL are helping enterprises in digital transformation through their respective cloud-supported solutions. Digital transformation offers a massive growth opportunity, driven by the growing adoption of cloud computing and artificial intelligence (AI). Per IDC estimates, the digital transformation market is expected to hit roughly $4 trillion by 2027, seeing a CAGR of 16.2% over the 2022-2027 timeframe. Both NOW and ORCL are well-poised to benefit from this higher spending trend.However, both ServiceNow and Oracle shares have suffered from tech sell-off year to date (YTD) due to higher tariffs and a challenging macroeconomic environment. While ServiceNow shares have lost 7.7% YTD, Oracle plunged 10.4%.NOW and ORCL Stock’s Performance Image Source: Zacks Investment Research So, ServiceNow or Oracle, which is a stronger prick right now?The Case for ServiceNowServiceNow’s Yokohama release is bringing new AI agents across varied domains, including CRM, HR and IT, delivering enhanced productivity as well as smoother and smarter functioning of workflows. NOW benefits from a rich partner base that includes Alphabet, Amazon, NVIDIA, Microsoft, and DXC Technology. Acquisitions, including Cuein, Logik.ai, and Moveworks, expand ServiceNow’s AI and Generative AI portfolio.NVIDIA and NOW collaborated to launch AI agents for the telecom industry. In March, ServiceNow expanded its partnership with NVIDIA to advance agentic AI, integrating NVIDIA Llama Nemotron models with the ServiceNow Platform to enhance AI-driven automation, decision-making, and business optimization. ServiceNow partnered with Vodafone Business to launch AI-powered service management solutions. A new partnership with Aptiv focuses on integrating ServiceNow's AI platform with edge intelligence to improve automation and efficiency across sectors such as telecommunications, automotive, aerospace, defense, and industrial industries.A strong portfolio and rich partner base are expanding NOW’s clientele. Exiting first-quarter 2025, ServiceNow had 72 transactions of more than $1 million in net new annual contract value (ACV) in the first quarter. The company expanded its customer relationships, reaching 508 customers with more than $5 million in ACV at the end of the reported quarter, which represents 20% year-over-year customer growth.NOW expects second-quarter subscription revenues to be $3.03-$3.035 billion, which suggests a rise of 19% to 19.5% year over year on a GAAP basis and 19.5% on a constant currency basis.The Case for OracleOracle rides on the ongoing momentum across its cloud business, driven by the strong uptake of Oracle Cloud Infrastructure and Autonomous Database offerings. The solid adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP) and Fusion ERP, bodes well. ORCL’s partnership with Amazon for Oracle Database@AWS and the general availability of Oracle Database@Google hold promise. Oracle’s Gen 2 Cloud is driving AI clientele.Oracle’s rich partner base that includes the likes of OpenAI, xAI, Meta Platforms, NVIDIA and AMD is a key catalyst. The launch of a new platform called AI Agent Studio, which allows businesses to create and manage AI agents for different parts of their operations, is noteworthy. Oracle is also expanding through its multi-cloud strategy. Its Database@Azure service is now available in 14 regions, and the company plans to add 18 more over the next year.Oracle expects total revenues to grow in the range of 9-11% year over year in the third quarter of fiscal 2025. Total cloud revenues are expected to grow in the range of 24-28% at constant currency and 25-27% on a reported basis.However, Oracle is suffering from stiff competition, security breaches, capacity constraints and declining free cash flow is concerning for investors.NOW’s Earnings Estimate Revision Positive, ORCL’s Goes SouthThe Zacks Consensus Estimate for NOW’s 2025 earnings is pegged at $16.48 per share, up 1.4% over the past 30 days, indicating an 18.39% increase over fiscal 2024’s reported figure. ServiceNow, Inc. Price and Consensus ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. QuoteHowever, the consensus mark for Oracle’s fiscal 2025 has declined by a penny to $6.03 per share over the past 30 days, suggesting 8.45% growth over 2024. Oracle Corporation Price and Consensus Oracle Corporation price-consensus-chart | Oracle Corporation Quote While NOW’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, Oracle missed thrice and beat only once. ServiceNow’s average surprise of 6.61% is much better than Oracle’s surprise of 0.83%, reflecting a good quality of earnings beat on a consistent basis. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Valuation: Oracle is Cheaper Than NOWValuation-wise, both ServiceNow and Oracle are overvalued, as suggested by the Value Score of F and D, respectively. However, in terms of forward 12-month Price/Sales, Oracle shares are trading at 6.47X, lower than NOW’s 14.62X.ORCL and NOW Valuation Image Source: Zacks Investment ResearchConclusionBoth ServiceNow and Oracle benefit from strong demand for digital transformation amid challenging macroeconomic conditions and lingering concerns related to tariffs. NOW’s strong portfolio, acquisitions and rich partner base are noteworthy compared to Oracle, which is suffering from stiff competition in the cloud computing market and recent security breaches.Currently, ServiceNow has a Zacks Rank #3 (Hold), making the stock a stronger pick compared with Oracle, which has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Oracle Corporation (ORCL): Free Stock Analysis Report ServiceNow, Inc. (NOW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks