William Blair Large Cap Growth Fund on ServiceNow
Thesis
ServiceNow provides cloud-based workflow and business-management software and remains strategically embedded in customer processes. The stock has been pressured by fears that AI agents could erode seat-based software economics, despite low-20% subscription growth and Now Assist scaling ahead of initial targets. Sentiment was also hurt by a softer margin outlook tied to acquisitions and delayed Middle East deal closings. The fund reduced the position but still believes ServiceNow's industry position, deep customer relationships and product expansion support long-term growth, while it continues to monitor AI competition closely.
“We believe ServiceNow’s long-term growth prospects remain well supported by its strong industry position, deep customer relationships, and ongoing expansion of its product offerings”
Key risks
- AI agents could erode the seat-based software model
- Softer margin outlook tied to acquisitions
- Delayed deal closings in the Middle East