Recent S&P 500 volatility is offering investors plenty of opportunities to snap up top-notch US stocks at slightly cheaper prices. The technology sector, in particular, is home to a wide range of promising enterprises with tremendous growth potential.

The problem is that such opportunities are unsurprisingly priced at a premium, inviting volatility.

However, volatility can be beneficial in creating new entry points for long-term investors. And one stock that’s started grabbing my attention is ServiceNow (NYSE:NOW). Since the end of January, shares of the digital automation cloud platform have stumbled 20% despite delivering fairly robust earnings.

So with £3k of cash at hand, is this a buying opportunity for my growth portfolio?

Growth versus price

Like many tech giants, shares of ServiceNow have always looked quite expensive. For reference, over the last five years the forward price-to-earnings ratio’s historically sat around 57. And right now, even after the stock lost almost a quarter of its value, this metric still stands at 56.5.

However, this premium valuation isn’t entirely unjustified. Over the last five years, sales have expanded by an annualised rate of 44.7%. And management’s been making aggressive investments into generative artificial intelligence (AI) solutions that seem to be picking up a lot of interest from customers.

In turn, free cash flow generation has remained consistently strong, enabling vast amounts of cash to accumulate on the balance sheet that’s now being deployed through share buyback schemes.

Needless to say, this sounds rather promising. So beyond a lofty valuation, what’s behind the recent surge in concern that sent the stock falling in the wrong direction?

Emerging risks

As usual, there are a lot of factors influencing ServiceNow. The group’s rising exposure to international markets is introducing some unwelcome currency exchange headwinds due to a stronger US dollar. However, a more pressing concern in my mind is the ongoing transition from a subscription-based revenue model to a consumption-based one.

On paper, this transition sounds like a win-win for ServiceNow and customers alike. The initial barriers to entry for client onboarding are reduced. At the same time, revenue for ServiceNow scales alongside customer operations, resulting in higher profit margins.

But, it’s important to remember that deploying this new pricing structure comes with notable execution and operational risk that could put ServiceNow’s market share in jeopardy.

The bottom line

Volatility’s often the price of admission when investing in US technology stocks. And investors who were willing to pay the piper five years ago have since been rewarded with an impressive near-200% return. So can this impressive performance be replicated between now and 2030?

I think the answer to that all depends on how much value management’s able to extract from its AI investments. Suppose these new tools are successful in getting new and existing customers to ramp up spending under its new consumption-based revenue model? In that case, the stock’s upward trajectory could be set to continue. Of course, that’s a big if.

Personally, I want to see a bit more progress before putting any capital to work. But should the stock take another 20% nosedive, then things may start to look far more interesting.