Key Highlights
- Oppenheimer adjusted ServiceNow’s price objective downward from $175 to $130, maintaining its Outperform stance
- Shares have declined 43% since the start of the year, currently hovering near $88
- First quarter financial results scheduled for April 22; analysts project revenue of $3.74 billion, representing approximately 21% annual growth
- Federal government contract obligations dropped 72% annually during Q1, creating pressure on cRPO metrics
- Oppenheimer’s research suggests NOW could achieve a milestone as the first enterprise software firm with AI revenue exceeding 10% by late 2026
ServiceNow has experienced considerable turbulence throughout 2026. Shares have tumbled approximately 43% since January, settling around $88 during Tuesday’s session, as investor anxiety surrounding artificial intelligence disruption continues to pressure the enterprise software industry.
Brian Schwartz, an analyst at Oppenheimer, reduced his price objective for NOW from $175 down to $130, pointing to compressed valuation multiples throughout the software sector. His Outperform recommendation remains unchanged.
Schwartz rejects the narrative that AI disruption poses a threat to ServiceNow. His analysis suggests the company stands positioned as a primary winner in the enterprise artificial intelligence transformation.
According to InvestingPro’s valuation models, NOW’s fair value sits at $130, indicating the shares currently trade below their intrinsic worth.
First Quarter Results Expected April 22
Oppenheimer forecasts Q1 revenue reaching $3.74 billion, marking roughly 21% growth compared to the same period last year, alongside pro forma earnings of $0.96 per share. Schwartz indicated his channel checks revealed “some upside to consensus estimates.”
The research firm highlighted weakness within the federal government vertical. Oppenheimer’s analysis shows federal obligations plummeted 72% year-over-year during Q1, landing around $48 million — substantially below the three-year seasonal average of $99 million.
Both a partial government shutdown and challenging prior-year comparisons contributed to this decline. The shortfall creates ongoing pressure for ServiceNow’s cRPO metric, an important forward-looking revenue indicator tracked by investors.
Aside from federal headwinds, Schwartz’s industry research revealed reduced large-deal momentum and public sector softness compared to the previous quarter.
Counterbalancing these challenges, the same industry sources reported “accelerating usage growth and expansion activity for ServiceNow’s AI business,” according to Schwartz’s notes.
Artificial Intelligence Momentum Building
ServiceNow operates with a 77.5% gross profit margin and produced $4.6 billion in free cash flow during the trailing twelve-month period.
The organization has embedded AI capabilities throughout its product suite, including improvements to data connectivity, workflow execution, and security features — all delivered to customers without incremental charges.
The company recently introduced the Context Engine, a framework leveraging ServiceNow’s existing data architecture to enhance AI agent decision-making.
Wall Street perspectives vary considerably. Bernstein maintained an Outperform rating. JMP Securities elevated the stock to Market Outperform. UBS moved in the opposite direction, downgrading to Neutral from Buy based on concerns about the company’s AI competitive positioning. BTIG reduced its price objective while preserving its Buy recommendation.
Schwartz recognized that AI disruption concerns “may keep ServiceNow as a ‘show-me-stock’ post earnings.” However, with investor sentiment near cyclical lows and shares down 43%, he believes the risk/reward profile favors patient, long-term investors.
His projections position ServiceNow to reach a historic milestone as the first enterprise software company with AI-related revenue surpassing 10% of total sales, anticipated by Q4 2026.
The company reports quarterly results on April 22.
