- The selloff was justified after a steep run-up, but the author views its size as excessive; the 18.5% Q4 guide may be conservative.
- Nearly $10B of acquisitions over 12–18 months expands ServiceNow’s AI-related TAM, though those offerings remain small beside mature ITSM and have limited near-term impact.
- The author expects AI products to drive growth reacceleration in 2027–2028, challenging the SaaS-disruption narrative; 17–18% growth is the base case, while 19–20% would be exceptional.
- Integration costs may temporarily depress margins and operating income. The author expects NOW to be near a base and rise over 6–12 months, with asymmetric upside at current prices.
Investment pitches
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72 71 - After a nearly 95% rally from the $80s to the high $150s, NOW had priced in much of the recovery; a slight earnings miss triggered what the author sees as an overreaction.
- The long thesis rests on profitable growth, subscription adoption, rising consumption, and growing RPO as evidence that demand remains intact; management is approaching AI adoption from a position of strength.
- The author remains long and may add after a solid base forms, with longer-dated options; near-term software-to-semiconductor rotation and algorithmic selling could prolong weakness.