ServiceNow Shares Rebound Following Analyst Endorsement

Shares of ServiceNow advanced approximately 3% on Monday. The gain followed a decision by the investment firm Wedbush Securities to reinstate the company to its prominent AI 30 List. In a note to clients, Wedbush analyst Dan Ives argued that market fears of artificial intelligence disrupting established software firms have been significantly overstated.

This positive movement occurs against a challenging backdrop for the stock. Since the start of the year, ServiceNow's share price has declined by 32%, positioning it as one of the technology sector's most significant underperformers. For context, the iShares Expanded Tech-Software Sector ETF has fallen nearly 20% over the same period. The entire industry faces pressure from investor concerns regarding the potential for AI tools to displace existing software solutions.

The stock touched a 52-week low of $98 on February 9, a stark contrast to its July peak of $211.48.

Analyst Consensus Remains Bullish

Despite the sharp price correction, analyst sentiment toward ServiceNow remains largely positive. According to data from MarketBeat, the consensus rating stands at "Moderate Buy," with an average price target of $193. Needham & Company recently reaffirmed a "Buy" rating with a $155 target.

The company's operational performance appears to contradict its stock price trajectory. For the fourth quarter of its 2025 fiscal year, reported in late January, ServiceNow posted subscription revenue growth of 21% year-over-year. Management also announced a new $5 billion share repurchase authorization, with $2 billion allocated for an accelerated buyback program.

Should investors sell immediately? Or is it worth buying ServiceNow?

Demand for its AI-powered product, Now Assist, was notably strong, with the annual contract value for new deals more than doubling sequentially from the previous quarter.

Wedbush Counters "Software Armageddon" Narrative

Dan Ives of Wedbush directly challenged the prevailing negative market sentiment. He characterized the fears as excessive, stating that the market is only in the third year of what is likely a decade-long AI buildout. Ives contends that enterprises will not hastily migrate sensitive data to AI projects while the transition processes remain complex and carry inherent risks.

Alongside ServiceNow, Wedbush also returned Salesforce to its AI 30 List.

Upcoming Quarterly Report in Focus

Looking ahead, ServiceNow has provided guidance for the first quarter of 2026. The company anticipates subscription revenue to be in the range of $3.65 billion to $3.66 billion, representing year-over-year growth of 21.5%. Investors are awaiting the next quarterly earnings release, expected around April 21 or 22.

The current situation highlights a central tension in the market: robust business fundamentals are clashing with deep uncertainty about the long-term impact of the AI revolution on traditional software business models.