NOW

ServiceNow (NYSE:NOW | NOW Price Prediction) has recovered from a brutal drawdown, and the market is still missing the story.

Hyperscalers and major technology companies such as Microsoft Corp. (NASDAQ:MSFT) and NVIDIA Corp. (NASDAQ:NVDA) are increasingly shaping the AI investment cycle, with Dan Ives, partner and senior managing director at Yorkville Ives, arguing that their heavy infrastructure spending is beginning to translate into revenue growth and easing some investor concerns about returns on massive capital expenditure.

Investors looking for stocks in the Computers - IT Services sector might want to consider either Fujitsu Ltd. (FJTSY) or ServiceNow (NOW).

ServiceNow (NYSE:NOW | NOW Price Prediction) has been punished in 2026 despite printing one of the strongest quarters in enterprise software.

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?

ServiceNow's platform now includes agentic AI governance, so clients can add AI agents to their unified platforms. It's growing at a rapid pace and adding larger contracts while generating robust free cash flow.

Software stocks are staging a comeback in the second half of the year, according to Jefferies analysts, who pointed to strong results from ServiceNow Inc (NYSE:NOW, XETRA:4S0), SAP, Roper Technologies, Atlassian (NASDAQ:TEAM) and Cloudflare as evidence the sector is shaking off fears of AI-driven disruption. Solid earnings beats, healthy margins and early signs of AI monetization through consumption growth and product up-tiering are easing investor concerns about software companies' long-term value, the analysts said.

ServiceNow remains a Strong Buy, with compelling growth, robust financials, and misunderstood AI integration driving upside potential. I'm closely monitoring Now Assist's path to $1B ACV, backlog and cRPO growth, margin normalization, and large deal closures for Q2. NOW trades at a P/E Non-GAAP of 28.51 and offers a 4.4% free cash flow yield, outperforming peers on growth and profitability metrics.

Tech market cycles typically reward early physical builders, but long-term economic rewards often migrate to the software application layer. Just as networking hardware, PC chips, and mobile handsets eventually ceded margin dominance to Microsoft and Google, today's foundational AI infrastructure may ultimately empower top-tier software platforms as well.

NOW's 23% YTD drop reflects AI competition and valuation concerns, even as subscription growth and AI monetization remain strong.