Wey How
Thematic Position Trader, Technology Stocks & Trend Following
ServiceNow is at a reasonable spot to find support for a higher low despite the renewed "software is dead again" narrative. Price broke its 21-day EMA, but on lowish volume, and it is sitting on the intact August 27 gap-up around $126-130. It remains a good stage-1 base with good risk/reward for those with a long enough timeframe and patience. x.comÂ
ServiceNow keeps selling more to existing customers over time, one of the biggest reasons to be bullish long term. Its 2011 customer cohort's annual contract value grew from an indexed $100 to $3,730 by Q3 2026, or 37.3x, even including customer losses. x.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
ServiceNow's Q2 shows AI adding to growth, with AI reaching $1B in annual contract value and full-year guidance raised. Revenue rose 24% to $3.99B, subscription revenue 24.5% to $3.88B, and adjusted EPS of $0.90 beat. Technically, higher lows are in place, with price at the volume-shelf launch area. x.comÂ
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.comÂ
ServiceNow's guidance growth is set to fall by another fifth next quarter, a poor trajectory rather than a buying opportunity after earnings. x.comÂ
ServiceNow is showing agentic AI traction, with its 2026 Now Assist AI revenue target raised from $1 billion to $1.5 billion. As LLMs become commodities, its platform of integrated workflows positions it as the modern IT and HR system. Broker price targets include Bernstein at $236, DA Davidson at $190 and Evercore at $150. x.comÂ
