ServiceNow faces mounting pressure in 2026. Shares have tumbled approximately 43% since January, settling around $88 during Tuesday’s session, as widespread anxieties about artificial intelligence disruption continue battering enterprise software stocks.
Brian Schwartz, an analyst at Oppenheimer, slashed his price objective on NOW to $130 from $175, attributing the revision to compressed valuation multiples throughout the software industry. Despite the reduction, he maintained his Outperform recommendation.
Schwartz dismisses concerns that AI will disrupt ServiceNow. Instead, he contends the platform could emerge as a primary winner in the enterprise AI transformation.
According to InvestingPro analysis, NOW’s intrinsic value stands at $130, indicating the shares are trading below fair value at present levels.
Oppenheimer forecasts first-quarter revenue reaching $3.74 billion, representing approximately 21% year-over-year expansion, alongside pro forma earnings of $0.96 per share. Schwartz noted his channel research suggests “some upside to consensus estimates.”
The investment firm highlighted weakness in the federal government vertical. Oppenheimer calculates that federal obligations contracted 72% annually in Q1, falling to roughly $48 million — significantly below the three-year seasonal norm of $99 million.
Both a partial government shutdown and difficult prior-year comparisons contributed to the decline. This weakness creates a headwind for ServiceNow’s current remaining performance obligations (cRPO) metric, which investors closely monitor as a predictor of future growth.
Beyond federal sector challenges, channel discussions revealed reduced large transaction activity and broader public sector softness compared to the previous quarter.
However, these same industry sources indicated “accelerating usage growth and expansion activity for ServiceNow’s AI business,” Schwartz reported.
ServiceNow maintains a robust 77.5% gross profit margin and produced $4.6 billion in free cash flow during the trailing twelve months.
The platform provider has embedded AI capabilities throughout its product suite, including improvements to data integration, workflow automation, and security functions — all provided at no extra charge to existing customers.
The company recently introduced the Context Engine, a framework that leverages ServiceNow’s proprietary data architecture to enhance AI agent performance and decision-making.
Wall Street remains divided on the stock. Bernstein sustained its Outperform rating. JMP Securities elevated shares to Market Outperform. UBS moved in the opposite direction, downgrading to Neutral from Buy amid concerns about the company’s competitive position in AI. BTIG reduced its target price while preserving its Buy recommendation.
Schwartz acknowledged that fears surrounding AI disruption “may keep ServiceNow as a ‘show-me-stock’ post earnings.” However, with investor sentiment approaching cyclical lows and shares down 43%, he believes the risk/reward equation favors patient, long-term holders.
He projects ServiceNow will become the first enterprise software company to derive more than 10% of total revenue from AI offerings, potentially reaching that milestone in the fourth quarter of 2026.
The company reports quarterly results on April 22.
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