TCW funds, an investment management company, released its “TCW Concentrated Large Cap Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their rally in the third quarter, driven by continued optimism around AI investments and positive corporate earnings. Against this backdrop, the fund (I share) returned +4.11% in the quarter compared to +10.51% for the Russell 1000 Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, TCW Concentrated Large Cap Growth Fund highlighted stocks such as ServiceNow, Inc. (NYSE:NOW). ServiceNow, Inc. (NYSE:NOW) offers intelligent workflow automation solutions for digital businesses. The one-month return of ServiceNow, Inc. (NYSE:NOW) was -4.95%, and its shares lost 30.99% of their value over the last 52 weeks. On December 24, 2025, ServiceNow, Inc. (NYSE:NOW) stock closed at $152.59 per share, with a market capitalization of $158.448 billion.
TCW Concentrated Large Cap Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its third quarter 2025 investor letter:
“Our weakest relative performance during the quarter came from the information technology sector. Shares of ServiceNow, Inc. (NYSE:NOW) (NOW; 5.15%**) moved lower despite reporting strong quarterly results. YoY growth in cRPO (current Remaining Performance Obligations) topped consensus expectations (+21.5% vs. +19.4%) and subscription revenue also beat consensus estimates, driven by net new ACV (Annual Contract Value) outperformance and better than expected on-premise sales. Investor concerns over NOW’s exposure to the U.S. Federal government have been an overhang for the stock, but NOW added six new government logos during the quarter, and the company has embedded conservatism into their guidance for next quarter. New products are showing strength, and AI-embedded SKUs are gaining traction as NOW closed 21 deals with 5+ Now Assist products (and the company closed a $20m deal during the quarter). We believe investors may not grasp the dominance of NOW’s competitive position as a workflow platform that can sit atop all systems of record in a company and provide workflow engines to get things done across multiple systems. ServiceNow is deeply entrenched across enterprises and may be able to serve as the single pane of glass for deploying and managing AI agents. We remain bullish on shares.”
ServiceNow, Inc. (NYSE:NOW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 104 hedge fund portfolios held ServiceNow, Inc. (NYSE:NOW) at the end of the third quarter, compared to 106 in the previous quarter. Third quarter subscription revenues of ServiceNow, Inc. (NYSE:NOW) were $3.299 billion, marking a 20.5% year-over-year growth in constant currency. While we acknowledge the potential of ServiceNow, Inc. (NYSE:NOW) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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