Key Takeaways
- Oppenheimer reduced ServiceNow’s price target from $175 down to $130 but maintained its Outperform rating
- Shares of NOW have declined 43% year-to-date, currently hovering near $88
- First quarter results are scheduled for April 22; analysts anticipate revenue reaching $3.74 billion, representing approximately 21% annual growth
- Federal government commitments plummeted 72% annually during Q1, creating pressure on the cRPO performance indicator
- Oppenheimer’s analyst believes NOW could emerge as the initial enterprise software firm achieving over 10% AI revenue contribution by the fourth quarter of 2026
ServiceNow has experienced significant turbulence throughout 2026. Shares have plummeted approximately 43% since the year began, hovering around $88 during Tuesday’s trading session, as anxiety surrounding artificial intelligence disruption has placed substantial pressure on enterprise software stocks.
Brian Schwartz, an analyst at Oppenheimer, slashed his price objective for NOW from $175 down to $130, attributing the adjustment to compressed valuation multiples throughout the software industry. Despite this reduction, he maintained his Outperform recommendation.
Schwartz remains unconvinced by the narrative suggesting AI will disrupt ServiceNow. Instead, he believes the enterprise could emerge as among the most significant winners from artificial intelligence adoption in the corporate sector.
According to InvestingPro analysis, NOW’s intrinsic value sits at $130, indicating the shares are currently trading below their fundamental worth.
First Quarter Results Due April 22
Oppenheimer projects first quarter revenue will reach $3.74 billion, marking roughly 21% growth compared to the same period last year, alongside pro forma earnings of $0.96 per share. Schwartz noted his research indicates “some upside to consensus estimates.”
The investment firm highlighted weakness within the federal government business segment. Oppenheimer’s calculations suggest federal commitments dropped 72% year-over-year during Q1, reaching approximately $48 million — representing less than half the three-year seasonal norm of $99 million.
Both a temporary government shutdown and difficult year-ago comparisons contributed to this decline. This weakness continues to pressure ServiceNow’s cRPO metric, which analysts monitor closely as a forward-looking revenue indicator.
Apart from federal headwinds, channel checks revealed reduced large-deal momentum and public sector weakness relative to the previous quarter.
Conversely, those same industry sources highlighted “accelerating usage growth and expansion activity for ServiceNow’s AI business,” Schwartz reported.
Artificial Intelligence Momentum Takes Center Stage
ServiceNow maintains a 77.5% gross profit margin and produced $4.6 billion in free cash flow during the trailing twelve-month period.
The organization has been embedding AI capabilities throughout its complete product suite, including improvements to data integration, workflow automation, and security features — all delivered without incremental charges to customers.
The company also introduced the Context Engine, a framework that leverages ServiceNow’s proprietary data architecture to enhance AI agent decision-making.
Wall Street perspectives remain divided. Bernstein maintained an Outperform stance. JMP Securities elevated the stock to Market Outperform. UBS moved in the opposite direction, downgrading to Neutral from Buy due to questions about the company’s AI competitive position. BTIG lowered its price objective while preserving its Buy recommendation.
Schwartz conceded that AI disruption concerns “may keep ServiceNow as a ‘show-me-stock’ post earnings.” However, with investor sentiment approaching pessimistic extremes and shares down 43%, he considers the risk/reward profile compelling for investors with longer time horizons.
He forecasts ServiceNow will become the first major enterprise software company with AI revenue exceeding 10% of total sales, potentially reaching this milestone by Q4 2026.
Quarterly results are scheduled for release on April 22.
