Key Takeaways
- Oppenheimer reduced ServiceNow’s price target to $130 from $175 but maintained its Outperform rating
- Shares have plummeted 43% in 2026, currently hovering around $88
- First-quarter results scheduled for April 22; analysts project $3.74 billion revenue, representing approximately 21% annual growth
- Federal government contract obligations plunged 72% annually in Q1, creating pressure on the cRPO indicator
- Oppenheimer’s analysis suggests NOW could achieve 10%+ AI-driven revenue contribution by late 2026, a first for enterprise software
ServiceNow’s 2026 performance has been challenging. Shares have declined approximately 43% since January, settling near $88 during Tuesday’s session, as anxiety surrounding artificial intelligence disruption continues to pressure enterprise software stocks.
Brian Schwartz, an analyst at Oppenheimer, lowered his price objective for NOW to $130 from a previous $175, attributing the adjustment to compressed valuations throughout the software industry. Despite the reduction, he maintained his Outperform recommendation.
Schwartz remains skeptical of the narrative that AI will disrupt ServiceNow. Instead, he believes the company stands positioned as a primary winner in the enterprise AI revolution.
According to InvestingPro analysis, NOW’s fair value stands at $130, indicating the shares are trading below their intrinsic worth at present levels.
First Quarter Results Due April 22
Oppenheimer anticipates first-quarter 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 research suggested “some upside to consensus estimates.”
The investment firm highlighted weakness in the federal government business. Oppenheimer calculates that federal obligations dropped 72% year-over-year during Q1, totaling approximately $48 million — substantially below the three-year seasonal norm of $99 million.
Both a temporary government shutdown and difficult prior-year comparisons contributed to the decline. This development presents a challenge for ServiceNow’s cRPO measurement, a critical indicator that investors monitor for future revenue visibility.
Apart from federal headwinds, channel feedback revealed diminished large transaction activity and public sector weakness compared to the previous quarter.
However, those same industry sources indicated “accelerating usage growth and expansion activity for ServiceNow’s AI business,” Schwartz noted.
Artificial Intelligence Momentum Building
ServiceNow maintains a 77.5% gross profit margin and produced $4.6 billion in free cash flow during the trailing twelve months.
The enterprise has been embedding AI capabilities throughout its complete product suite, featuring improvements to data integration, workflow automation, and security functions — all delivered without extra charges to clients.
Additionally, the company introduced the Context Engine, a framework that leverages ServiceNow’s native data architecture to guide AI agent actions.
Wall Street opinion remains divided. Bernstein retained an Outperform rating. JMP Securities elevated the stock to Market Outperform. UBS took a contrarian approach, downgrading to Neutral from Buy citing worries about the company’s AI competitive position. BTIG reduced its price objective while maintaining its Buy recommendation.
Schwartz recognized that AI disruption concerns “may keep ServiceNow as a ‘show-me-stock’ post earnings.” Nevertheless, with investor sentiment depressed and shares down 43%, he considers the risk/reward profile compelling for investors with extended time horizons.
He projects ServiceNow will become the inaugural enterprise software company achieving a double-digit AI revenue contribution, potentially by the fourth quarter of 2026.
The company reports earnings on April 22.
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