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Special Situations & Volatility Investor, Wall Street Background
ServiceNow's CEO is unlikely to stake his credibility on a confident message he can't deliver. Bill McDermott is everywhere with a clear, consistent message on AI and growth, and a miss or guide-down afterward would cost him credibility instantly. In a clip @MarceloLima shares, he cites 20%-plus subscription growth, expanding margins and flat headcount at a 'rule of 56' he wants to take into the 60s. Nvidia's Jensen Huang has also named ServiceNow within the AI ecosystem. x.com
ServiceNow is a rare opportunity because the narrative that AI will kill it is far from true. The stock is down about 31% over the past year, yet NVIDIA's Jensen Huang says ServiceNow can grow 100-fold, CEO Bill McDermott bought about $3 million of shares near $104.60, and Donald Trump disclosed a $1M-5M purchase in February. x.com
ServiceNow's unexpected expense surge makes its rich valuation more vulnerable in a struggling software sector. Revenue rose 21%, but spending drove an EPS miss and one quarter of guided cRPO deceleration; wider market conditions could hurt near term. The 20% selloff looks excessive, and few software companies should benefit as much from AI. Management could deliver over 3-5 years, though the stock is only close to a buy again now; below $100 looks good for the long term. x.com x.com x.com x.com
ServiceNow's seat business is being cannibalized faster than AI deals can replace it. Next-quarter cRPO growth is guided to 18.5%, down from 20.5%, while subscription growth was 24.5% two quarters ago; agentic usage on its platform is up 13x. Management points to AI deal value heading to $1.7bn, against a roughly $16bn subscription business. The slowdown leaves more pain ahead. Underweight, $90 target. x.com x.com
ServiceNow has put in a very clear bottom and is still cheap at 25x forward earnings. Its monthly RSI hit oversold and volume surged, always a strong confirmation of tops and bottoms. The stock will most likely triple over the next 18 months if it applies AI well to its business model, as Jensen Huang seems to expect. x.com
ServiceNow's AI contract growth and improving free cash flow margin make the 18% selloff excessive and its shares a massive discount among leading enterprise AI companies. AI net-new ACV rose 65%; its 2026 AI ACV target rose to $1.7B, up 70% from the start of the year. Adjusted operating margin slipped to 32.5% from 33.5%, but free cash flow margin rose to 20% from 17.5%. Acquisition costs, stock compensation and severance largely drove the GAAP decline. x.com x.com x.com
ServiceNow's slowing contracted-revenue growth suggests agentic AI and growing open-source alternatives may be reducing the need for its products. Q3 operating margin fell to 9.4% from 16.8% a year earlier, net income dropped, and cRPO growth slowed from 25% to 20.5%; Q4 guidance implies 18.5%. x.com
ServiceNow's third-quarter subscription revenue, cRPO and operating-margin beats make its double-digit selloff look overdone. After a 77% rise from April lows, it needed a big beat and raise; lower fourth-quarter cRPO guidance and back-loaded implications for $30-$32 billion in subscription growth by 2030 leave the stock in show-me mode. x.com
ServiceNow's AI business undercuts fears that AI will put it out of business. Its AI revenues are expected to surpass $1.5 billion by the end of 2026 and reach $9.6 billion in 2030. The stock rose 9% back to $137 a share. x.com x.com
ServiceNow's guidance growth is set to fall by another fifth next quarter, a poor trajectory rather than a buying opportunity after earnings. x.com
ServiceNow is heading to $160 before year-end as its cybersecurity capabilities and safe AI pitch gain credit. CEO Bill McDermott, part of the White House AI forum, is expected to stress that its agents give enterprise customers safe AI. The timely Armis acquisition is not getting enough credit, and the talent it acqui-hired will pay dividends. x.com
