The stock market can’t make up its mind.On one hand, it is fretting over the hundreds of billions of dollars being spent on artificial intelligence (AI) infrastructure. Tech giants such as Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Microsoft (NASDAQ: MSFT) have collectively earmarked over US$600 billion in capital expenditure for 2026 alone, a figure that comfortably surpasses Singapore’s entire GDP.Investors are asking: will all this spending ever pay off?On the oth ...

Core Insights - Salesforce, Inc. (CRM) is focusing on its Agentforce platform to rejuvenate revenue growth, which has recently slowed to single digits after years of strong double-digit increases [1][10] Revenue Growth - In fiscal 2026, Salesforce's revenue growth rates for the first three quarters were 7.6%, 9.8%, and 8.6% year over year [1] - The Zacks Consensus Estimate predicts revenue growth of 9.5% and 10.7% for fiscal 2026 and 2027, respectively [5] Agentforce and AI Integration - Salesforce is developing a broader ecosystem centered on artificial intelligence (AI), data, and collaboration, with Agentforce as a key component [2] - The Agentforce platform, combined with Data Cloud, generated $1.4 billion in recurring revenues in Q3 of fiscal 2026, marking a 114% year-over-year increase [3] - Agentforce alone contributed $540 million in recurring revenues, reflecting a 330% year-over-year growth [3] Booking Trends - Salesforce reported a current remaining performance obligation of $29.4 billion at the end of Q3 fiscal 2026, an 11% increase year over year, driven by larger deals and early renewals [4][10] - Over 50% of Agentforce deals originated from existing clients, indicating effective cross-selling of AI features [4] Competitive Landscape - Microsoft and ServiceNow are also advancing AI automation in the enterprise market, with Microsoft integrating AI features into Dynamics 365 and ServiceNow deploying AI tools for IT service management [6][7] Valuation and Performance - Salesforce's shares have decreased by 40.9% over the past year, compared to a 17.1% decline in the Zacks Computer – Software industry [8] - The company trades at a forward price-to-earnings ratio of 14.37, significantly lower than the industry average of 21.96 [12] - Earnings estimates for fiscal 2026 and 2027 suggest year-over-year increases of approximately 15.3% and 10.4%, respectively, with recent upward revisions [15]

What goes up must come down – this could not be more apt for some of the most well-known AI-linked tech stocks:Amazon (NASDAQ: AMZN) Microsoft (NASDAQ: MSFT) ServiceNow (NYSE: NOW) Amid the headwinds of rising capital expenditures (capex) and “doom-and-gloom” AI disruption narratives, are they buying opportunities or value traps masquerading as bargains?We unpack their earnings to find out.ServiceNow: AI Disruption Victim?Is AI eating ServiceNow’s business? With ServiceNow undergoing a 45% plunge in share p ...

Core Insights - ServiceNow's product expansion is accelerating, leading to measurable growth and reinforcing the case for continued upside [1] - Major fourth-quarter growth drivers include Now Assist, Workflow Data Fabric, Raptor, and CPQ, which have outperformed expectations and gained widespread adoption in large enterprise deals [1][2] Product Expansion and Adoption - Growing attach rates and multi-product adoption are enhancing ServiceNow's expansion, with Workflow Data Fabric included in most large deals and Raptor achieving triple-digit growth in new contract value [2] - Now Assist has surpassed $600 million in annual contract value, indicating strong AI monetization and faster multi-module deployments as customers scale AI for productivity and cost efficiency [2] Enterprise Deal Activity - The product-led momentum is translating into stronger enterprise deal activity, with major contract wins and a rising base of high-value customers [3] - The Zacks Consensus Estimate forecasts revenue growth of over 20% in 2026, supporting a favorable outlook for ServiceNow [3] Competitive Landscape - ServiceNow faces competition from Salesforce and Atlassian in its product expansion efforts [4] - Salesforce is extending its Agentforce into IT service and workflow automation, challenging traditional workflow tools with a unified data platform and embedded AI [5] - Atlassian is accelerating its product expansion with an AI-powered "system of work," integrating various tools and extending service capabilities into HR and finance [6] Financial Performance and Valuation - ServiceNow shares have declined 45.8% over the past year, underperforming the broader Zacks Computer and Technology sector, which returned 23.7% [7] - The forward 12-month price/sales ratio for ServiceNow is 6.84X, compared to the sector's 6.54X, indicating that the stock may be overvalued [11] - The Zacks Consensus Estimate for ServiceNow's 2026 earnings is $4.12 per share, reflecting a 17.38% year-over-year increase [14]

Core Insights - ServiceNow's shares have declined by 41.9% over the past three months, underperforming the broader Computer and Technology sector and the Financial-Miscellaneous Services industry [2][3] - Concerns regarding short-term growth, rising AI and cloud spending, and acquisition integration risks have contributed to the stock's decline [3][10] - Despite the downturn, ServiceNow's fundamentals indicate potential for a hold position, supported by strong AI adoption and a discounted valuation [8][20] Company Performance - ServiceNow's stock has underperformed compared to competitors like SAP, Microsoft, and Salesforce, which saw declines of 19.3%, 20.8%, and 20.9% respectively [4] - The company is experiencing increased adoption of its AI-native products, with Now Assist exceeding $600 million in Annual Contract Value (ACV) and new ACV more than doubling year over year [9][10] - The growth in AI adoption is translating into platform expansion, with enterprises increasing AI use for customer service and operations [11] Competitive Landscape - Competitors such as SAP, Salesforce, and Microsoft are embedding service management and workflow automation into their larger enterprise platforms, posing challenges for ServiceNow [5] - ServiceNow is leveraging a rapidly expanding partner ecosystem, including collaborations with Microsoft, OpenAI, and industry-specific alliances, to enhance AI adoption and interoperability [12][13] Valuation and Market Position - ServiceNow's valuation remains attractive, with a forward 12-month Price/Sales (P/S) multiple of 6.48X compared to the industry average of 13.88X, indicating potential for appreciation [14] - The company is facing pressures from elevated AI spending, acquisition integration risks, and weak technical momentum, which may impact margins and investor sentiment in the near term [20]

Core Viewpoint - The software-as-a-service (SaaS) sector is currently facing significant challenges, with ServiceNow's stock declining despite strong fourth-quarter results and positive guidance [1] Group 1: Company Performance - ServiceNow reported a 20.5% year-over-year revenue increase to $3.57 billion for Q4, with adjusted earnings per share (EPS) rising 26% to $0.92, surpassing analyst expectations [3] - Subscription revenue grew by 21% year over year to $3.47 billion, while professional services revenue increased by 13% to $102 million [3] - Remaining performance obligations (RPO) rose by 26.5% to $28.2 billion, with current RPO (cRPO) increasing by 25% to $12.85 billion [4] Group 2: Future Outlook - The company forecasts Q1 subscription revenue growth of 21.5%, estimating a range of $3.650 billion to $3.655 billion, and anticipates cRPO to increase by 22.5% [5] - For the full year, ServiceNow projects subscription revenue between $15.53 billion and $15.57 billion, indicating growth of 20.5% to 21% [5] Group 3: Strategic Initiatives - ServiceNow is transitioning to an AI-first company, with its generative AI suite, Now Assist, achieving a $600 million annual contract value (ACV) and aiming for over $1 billion by the end of 2026 [2] - The company is acquiring AI cybersecurity firms Armis and Veza to integrate security and AI capabilities, and is developing its AI Control Tower platform to serve as an orchestration platform for agentic AI [2][6]

Core Viewpoint - ServiceNow, Inc. is recognized as a leading AI innovator and CRM share gainer, with Piper Sandler maintaining an Overweight rating and a price target of $200.00 [1][3] Group 1: Financial Performance - ServiceNow's fourth quarter results marked a strong finish to FY25, with momentum building in its Now Assist and CRM products [2] - The initial 2026 organic outlook exceeded street expectations, although shares declined after-hours due to organic growth guidance not meeting some investor expectations [2] Group 2: Market Position - Piper Sandler continues to emphasize ServiceNow's position as a market leader in AI innovation and CRM, which supports its Buy rating [3] - The company provides a platform that integrates workflows, data, and AI to enhance operational efficiency across large organizations [3]

With a market cap of about $121.5 billion and a broad global footprint, ServiceNow operates at true enterprise scale. The platform integrates with major cloud providers, large language models, and enterprise data, positioning the company as a “control tower” for modern businesses. A flexible pricing mix of subscription and consumption models, including the Pro Plus tier, supports growth while reinforcing its long-term relevance.Founded in 2004, ServiceNow has evolved into a central force in enterprise digit ...

Investment Rating - The report maintains a BUY rating for ServiceNow, indicating a potential return of over 15% over the next 12 months [17]. Core Insights - ServiceNow reported a total revenue increase of 21% YoY to US$3.57 billion in 4Q25, aligning with Bloomberg consensus estimates. Non-GAAP operating income grew by 26% YoY to US$1.10 billion, exceeding consensus by 3% due to AI-enhanced efficiencies and disciplined expense control [1]. - For FY26E, management guided subscription revenue to increase by 20.5%-21% YoY to US$15.53-15.57 billion, with a further 100bps expansion of both non-GAAP operating profit and free cash flow margin to 32% and 36%, respectively, driven by AI-enabled efficiency gains [1]. - The AI product momentum remains strong, with Now Assist annual contract value (ACV) surpassing US$600 million in 4Q25, ahead of the previous target of US$500 million and on track to reach US$1 billion by FY26-end [1]. - The target price for ServiceNow has been lowered to US$215.00 based on a 40x FY26E EV/EBITDA, down from US$236.00 based on a 45x FY26E EV/EBITDA, reflecting sector valuation impacts due to increased competition from AI and LLM service providers [1][12]. Financial Summary - For FY26E, total revenue is projected at US$15.973 billion, with adjusted net profit expected to reach US$4.518 billion, resulting in an adjusted EPS of US$4.36 [2]. - The company’s market capitalization is approximately US$122.22 billion, with a current share price of US$116.73, indicating an upside potential of 84.2% to the target price [3][4]. - The non-GAAP operating profit margin expanded by 1.4 percentage points YoY to 30.9% in 4Q25, attributed to improved efficiency and disciplined expense control [9]. Growth Projections - Subscription revenue is expected to grow by 20.3% in FY26E, with adjusted net profit growth projected at 23.2% [15]. - The company anticipates a revenue growth rate of 20.5%-21% for FY26E, with further growth expected in subsequent years [1][14]. Valuation - The valuation of ServiceNow is set at US$215.00 per share based on a target EV/EBITDA of 40x for FY26E, which is at a premium to the sector average of 29x, justified by the strong earnings growth outlook [12][13].

Core Insights - ServiceNow (NOW) reported fourth-quarter 2025 adjusted earnings of 92 cents per share, exceeding the Zacks Consensus Estimate by 5.75% and reflecting a 26% year-over-year increase. Revenues reached $3.57 billion, surpassing the consensus mark by 1.25% and increasing by 20.7% year over year [1][8]. Revenue Performance - Subscription revenues improved by 20.9% year over year to $3.47 billion, while on a constant currency basis, revenues increased by 19.5% to $3.41 billion. Professional services and other revenues rose by 12.1% year over year to $102 million, with a constant currency increase of 11% to $101 million [2]. - The current remaining performance obligations (cRPO) stood at $12.85 billion, marking a 25% year-over-year increase on a reported basis and a 21% increase on a constant currency basis. Remaining performance obligations on a constant currency basis rose 22.5% year over year to $28.2 billion [3]. Client Growth and Product Performance - The company recorded 244 transactions exceeding $1 million in net new annual contract value (ACV) in Q4 2025, representing nearly 40% year-over-year growth. ServiceNow ended the quarter with 603 customers with over $5 million in ACV, reflecting approximately 20% year-over-year growth [4]. - AI-powered products such as Now Assist and Raptor significantly contributed to the growth in net new ACV, with RaptorDB Pro tripling its net new ACV year over year. The number of workflows and transactions grew over 33%, increasing from $60 billion to $80 billion and from $4.8 trillion to $6.4 trillion, respectively [5][6]. Operating Metrics - In Q4 2025, the non-GAAP gross margin was 80.3%, down 160 basis points year over year. The subscription gross margin was 82.7%, also contracting by 160 basis points year over year. Professional services reported a gross loss of $2 million compared to a gross income of $7 million in the previous year [7]. - Operating expenses as a percentage of revenues decreased by 180 basis points year over year to 64.2%, while the non-GAAP operating margin expanded by 140 basis points year over year to 30.9% [9]. Cash Flow and Share Repurchase - As of December 31, 2025, the company had cash and cash equivalents and marketable securities totaling $6.28 billion, up from $5.41 billion as of September 30, 2025. Cash from operations was $2.24 billion, compared to $813 million in the previous quarter, with free cash flow reaching $2.03 billion, up from $592 million in the prior quarter [10]. - The company repurchased 3.6 million shares in Q4 2025 and announced a new share repurchase authorization worth $5 billion, along with plans for a $2 billion accelerated share repurchase program [11]. Guidance for 2026 - For 2026, ServiceNow expects subscription revenues to be between $15.53 billion and $15.57 billion, indicating a rise of 20.5% to 21% from 2025. The guidance includes a 1% contribution from Moveworks. The non-GAAP subscription gross margin is anticipated to be 82%, with a non-GAAP operating margin of 32% and a free cash flow margin expected to be 36% [12]. - For Q1 2026, subscription revenues are projected to be between $3.65 billion and $3.67 billion, suggesting year-over-year growth of 21.5% on a GAAP basis [13][14].