TCW Concentrated Large Cap Growth Fund Maintains a Constructive View on ServiceNow (NOW)

Soumya Eswaran

Wed, May 20, 2026 at 9:14 AM EDT 4 min read

TCW Funds, an investment management firm, published its first-quarter 2026 investor letter for the 'TCW Concentrated Large Cap Growth Fund.' A copy of the letter is available to download here. The first quarter was marked by volatility in equity markets, driven by geopolitical tensions, concerns about the private credit sector, a government shutdown, and ongoing AI concerns. During this period, The Fund (I Share) reported a net loss of 11.75%, lagging behind the Russell 1000 Growth Index return of -9.78%. The Fund considers the market's broadening as a healthy sign and remains confident that the market will eventually recognize the portfolio's intrinsic value. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.

In its first-quarter 2026 investor letter, TCW Concentrated Large Cap Growth Fund highlighted stocks like ServiceNow, Inc. (NYSE:NOW). ServiceNow, Inc. (NYSE:NOW) is a cloud-based software company that provides a platform for automating and managing digital workflows. On May 19, 2026, ServiceNow, Inc. (NYSE:NOW) closed at $101.83 per share. One-month return of ServiceNow, Inc. (NYSE:NOW) was -1.20%, and its shares lost 49.83% over the past 52 weeks. ServiceNow, Inc. (NYSE:NOW) has a market capitalization of $105.02 billion.

TCW Concentrated Large Cap Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2026 investor letter:

"Our weakest relative performance during the quarter came from the information technology and healthcare sectors. Shares of ServiceNow, Inc. (NYSE:NOW; 2.60%**) moved lower despite reporting solid quarterly results in late January. Operating margin (33.5%) and EPS (+30% YoY) topped consensus estimates, and cRPO (current Remaining Performance Obligations) grew 20.5% (vs. guidance of +18%). Management’s sequential forward guidance for cRPO was only in-line with consensus estimates, however, and provided ammunition for bears to posit NOW’s three recent acquisitions (Armis, Moveworks and Veza) were a signal that organic growth may be slowing. While we believe the organic growth outlook remains healthy and that all three acquisitions are good strategic fits that help expand NOW’s TAM (Total Addressable Market) and differentiation, the rise of agentic AI led to an abrupt market sell off in many SaaS (Software-as-a-Service) stocks, including NOW. The market’s current view is that well-funded AI labs such as Anthropic and OpenAI will allow enterprises to bypass specialized software, thus reducing the need for NOW’s offerings. Though we recognize the industry is shifting away from seat-based to consumption-oriented pricing structures, we believe the complexity and switching costs for an enterprise migration is misunderstood by the market. Our view remains that NOW is strongly positioned to capitalize on AI monetization given its role as the system of engagement across enterprise workflows. While still somewhat early, NOW’s monetization of AI offerings is impressive (closed 12 Now Assist deals over $1 million in ACV during the quarter, Agent Assist consumption grew 55x since the launch in May 2025, and $600 million ACV for Now Assist). We remain constructive on shares."