Enterprise Software Sector Faces AI Disruption
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Source: seekingalpha
- Seat-Based Model Struggles: Truist Securities reported that companies with predominantly seat-based business models have been the worst performers since 2025, continuing to underperform into early 2026, indicating a lack of market confidence that could lead to declining revenues and profits for these firms.
- Price Target Reductions: Truist lowered price targets for several companies, including Atlassian from $210 to $150, GitLab from $42 to $35, PagerDuty from $16 to $12, and ServiceNow from $240 to $175, reflecting analysts' cautious outlook on their future performance amid ongoing market volatility.
- Impact of AI Narratives: Truist highlighted that companies like MongoDB, JFrog, and Snowflake have benefited from AI narratives, receiving Buy ratings, suggesting these firms possess stronger growth potential in the current market environment, which may attract more investor interest.
- Overall Market Decline: The iShares Expanded Tech-Software Sector ETF (IGV) fell 2.2% today and has declined 22% year-to-date, indicating the pressure faced by the entire software sector and diminishing investor confidence in future prospects.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy NOW?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on NOW
Wall Street analysts forecast NOW stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for NOW is 222.81 USD with a low forecast of 172.00 USD and a high forecast of 263.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
32 Analyst Rating
30 Buy
2 Hold
0 Sell
Strong Buy
Current: 102.630
Low
172.00
Averages
222.81
High
263.00
Current: 102.630
Low
172.00
Averages
222.81
High
263.00
About NOW
ServiceNow, Inc. provides an artificial intelligence (AI) platform for business transformation. The Company’s AI platform connects people, processes, data, and devices to increase productivity and maximize business outcomes. Its intelligent platform, the Now Platform, is a cloud-based solution that helps enterprises and organizations across public and private sectors digitize workflows. The workflow applications built on the Now Platform are organized into four primary areas: Technology, CRM and Industry, Core Business and Creator. Its products include IT Service Management, IT Operations Management, HR Service Delivery, ServiceNow AI Agents, AI Experience, Build Agent, ServiceNow AI Control Tower, AI Agent Fabric, RaptorDB, Workflow Data Fabric, Workplace Service Delivery, ServiceNow Platform Encryption, Telecommunications Service Operations Management, and others. The Company also offers identity security, helping organizations secure access across the enterprise.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
ServiceNow Stock Outlook Remains Promising
- Price Target Revision: Truist lowered ServiceNow's price target from $240 to $175 while maintaining a Buy rating, indicating that despite market concerns over terminal value, short-term fundamentals remain solid, reflecting a focus on AI narratives.
- AI Competitiveness Enhancement: Jim Cramer highlighted ServiceNow's increasing competitiveness in the AI space, especially as vendors with seat-based models underperform, suggesting a strategic shift towards AI applications to enhance market positioning.
- Growth Potential: Goldman Sachs added ServiceNow to its US Conviction List, maintaining a Buy rating with a $216 price target, anticipating the company to achieve 20% organic growth annually through 2029, showcasing robust expansion opportunities in new domains.
- Intelligent Platform Advantage: ServiceNow's Now Platform offers comprehensive workflow automation solutions embedded with AI and machine learning, aimed at boosting productivity and maximizing business outcomes, further solidifying its market leadership in digital transformation.
See More
Software Stocks Face Unprecedented Selloff Amid AI Concerns
- Software Stock Selloff: Wedbush analyst Dan Ives highlighted that Wall Street's selloff of software stocks like Salesforce, ServiceNow, and Microsoft is unprecedented, indicating severe investor skepticism about their relevance in the AI era, which could lead to declining performance over the next few years.
- Historic Decline: Ives noted that in his 25 years of experience, he has never witnessed such a structural selloff, with software companies being perceived as lacking space in the AI age, reflecting a significant drop in market confidence that could result in a loss of about 5% of customers.
- AI Impact Analysis: While Ives acknowledged that AI disrupts the software industry, he argued that considering software as obsolete is an extreme view, citing Palantir as an example of how software can still thrive in the AI era, demonstrating that there is still room for software to succeed.
- Market Reaction: The stock prices of Microsoft, Salesforce, and ServiceNow have dropped 16.75%, 25.87%, and 30.47% respectively over the past month, indicating a pessimistic outlook from investors regarding the future prospects of these companies and reflecting a waning confidence in the software sector.
See More
Analysis of the 'SaaSpocalypse' for Tech Stocks
- Market Trend Analysis: The video discusses the phenomenon termed 'SaaSpocalypse' concerning technology and software stocks, highlighting its potential impact on investors, particularly in the context of rapid advancements in AI.
- Investment Recommendations: The analyst team has identified ten stocks deemed the best for current investment, notably excluding Shopify, which indicates a cautious outlook on its future performance.
- Historical Return Comparison: It references the investment returns of Netflix and Nvidia at the time of their recommendations, yielding $436,126 and $1,053,659 respectively, showcasing Stock Advisor's strategy's significant historical market outperformance.
- Investor Community Value: The emphasis is placed on the value of the Stock Advisor investor community, encouraging individual investors to engage and leverage the platform for the latest investment advice and market insights.
See More
Three Unconventional "Buy the Dip" Selections—and One Sector to Steer Clear Of
Market Trends: The market is experiencing a pullback, creating opportunities for contrarian investors as many individual stocks are down significantly, suggesting a potential for selective buying strategies.
Investment Strategies: Jeff Clark emphasizes the importance of identifying oversold stocks and sectors, particularly in software and grocery chains, while advising caution against popular trades like gold mining stocks.
Bitcoin Sentiment: Current bearish sentiment around Bitcoin contrasts sharply with previous bullish trends, with Clark suggesting that today's prices may be more attractive for investment compared to past highs.
Contrarian Opportunities: Clark highlights that emotional market conditions often present unique investment opportunities, particularly in sectors that are currently undervalued or overlooked.
See More
AI Investment Outlook Surpasses Cryptocurrencies
- AI Spending Surge: Gartner forecasts a 44% year-over-year increase in global AI spending, reaching $2.5 trillion by 2026, indicating a shift towards a sustainable investment cycle that attracts long-term investors.
- Nvidia's Market Potential: Nvidia is expected to benefit from $527 billion in AI capital expenditures by 2026, up from $400 billion in 2025, highlighting robust demand for its AI-optimized chips and solutions, which strengthens its competitive position in the tech industry.
- ServiceNow's Revenue Growth: ServiceNow's subscription revenue increased by 19.5% year-over-year to $3.47 billion in Q4 2025, with a 98% customer renewal rate, providing strong revenue visibility for the future and showcasing its solid performance in the cloud services market.
- Success of AI Products: ServiceNow's AI product NOW Assist surpassed $600 million in annual contract value in Q4, with expectations to exceed $1 billion by 2026, demonstrating the company's success in monetizing AI and solidifying its role in enterprise digital transformation.
See More
The SaaSpocalypse Moment for Tech Stocks
- Market Dynamics Analysis: On February 5, 2026, technology and software stocks are experiencing what is termed the 'SaaSpocalypse' moment, indicating market concerns about future growth in these sectors, which may lead investors to reassess their portfolios.
- Investor Reactions: Following the video's release, investors are reminded to consider the potential risks associated with tech stocks, which could prompt them to adjust their holdings in the short term to mitigate market volatility.
- Industry Outlook: The mention of the DeepSeek moment in the video suggests that the tech sector may be at a significant turning point, necessitating close monitoring of the financial health and market performance of relevant companies.
- Subscription and Promotion: The video encourages viewers to subscribe and click on a special offer link, indicating the content creator's intent to enhance audience engagement and increase platform influence and revenue.
See More
ServiceNow Stock Outlook Remains Promising
- Price Target Revision: Truist lowered ServiceNow's price target from $240 to $175 while maintaining a Buy rating, indicating that despite market concerns over terminal value, short-term fundamentals remain solid, reflecting a focus on AI narratives.
- AI Competitiveness Enhancement: Jim Cramer highlighted ServiceNow's increasing competitiveness in the AI space, especially as vendors with seat-based models underperform, suggesting a strategic shift towards AI applications to enhance market positioning.
- Growth Potential: Goldman Sachs added ServiceNow to its US Conviction List, maintaining a Buy rating with a $216 price target, anticipating the company to achieve 20% organic growth annually through 2029, showcasing robust expansion opportunities in new domains.
- Intelligent Platform Advantage: ServiceNow's Now Platform offers comprehensive workflow automation solutions embedded with AI and machine learning, aimed at boosting productivity and maximizing business outcomes, further solidifying its market leadership in digital transformation.
See More
Software Stocks Face Unprecedented Selloff Amid AI Concerns
- Software Stock Selloff: Wedbush analyst Dan Ives highlighted that Wall Street's selloff of software stocks like Salesforce, ServiceNow, and Microsoft is unprecedented, indicating severe investor skepticism about their relevance in the AI era, which could lead to declining performance over the next few years.
- Historic Decline: Ives noted that in his 25 years of experience, he has never witnessed such a structural selloff, with software companies being perceived as lacking space in the AI age, reflecting a significant drop in market confidence that could result in a loss of about 5% of customers.
- AI Impact Analysis: While Ives acknowledged that AI disrupts the software industry, he argued that considering software as obsolete is an extreme view, citing Palantir as an example of how software can still thrive in the AI era, demonstrating that there is still room for software to succeed.
- Market Reaction: The stock prices of Microsoft, Salesforce, and ServiceNow have dropped 16.75%, 25.87%, and 30.47% respectively over the past month, indicating a pessimistic outlook from investors regarding the future prospects of these companies and reflecting a waning confidence in the software sector.
See More
Analysis of the 'SaaSpocalypse' for Tech Stocks
- Market Trend Analysis: The video discusses the phenomenon termed 'SaaSpocalypse' concerning technology and software stocks, highlighting its potential impact on investors, particularly in the context of rapid advancements in AI.
- Investment Recommendations: The analyst team has identified ten stocks deemed the best for current investment, notably excluding Shopify, which indicates a cautious outlook on its future performance.
- Historical Return Comparison: It references the investment returns of Netflix and Nvidia at the time of their recommendations, yielding $436,126 and $1,053,659 respectively, showcasing Stock Advisor's strategy's significant historical market outperformance.
- Investor Community Value: The emphasis is placed on the value of the Stock Advisor investor community, encouraging individual investors to engage and leverage the platform for the latest investment advice and market insights.
See More
Three Unconventional "Buy the Dip" Selections—and One Sector to Steer Clear Of
Market Trends: The market is experiencing a pullback, creating opportunities for contrarian investors as many individual stocks are down significantly, suggesting a potential for selective buying strategies.
Investment Strategies: Jeff Clark emphasizes the importance of identifying oversold stocks and sectors, particularly in software and grocery chains, while advising caution against popular trades like gold mining stocks.
Bitcoin Sentiment: Current bearish sentiment around Bitcoin contrasts sharply with previous bullish trends, with Clark suggesting that today's prices may be more attractive for investment compared to past highs.
Contrarian Opportunities: Clark highlights that emotional market conditions often present unique investment opportunities, particularly in sectors that are currently undervalued or overlooked.
See More
AI Investment Outlook Surpasses Cryptocurrencies
- AI Spending Surge: Gartner forecasts a 44% year-over-year increase in global AI spending, reaching $2.5 trillion by 2026, indicating a shift towards a sustainable investment cycle that attracts long-term investors.
- Nvidia's Market Potential: Nvidia is expected to benefit from $527 billion in AI capital expenditures by 2026, up from $400 billion in 2025, highlighting robust demand for its AI-optimized chips and solutions, which strengthens its competitive position in the tech industry.
- ServiceNow's Revenue Growth: ServiceNow's subscription revenue increased by 19.5% year-over-year to $3.47 billion in Q4 2025, with a 98% customer renewal rate, providing strong revenue visibility for the future and showcasing its solid performance in the cloud services market.
- Success of AI Products: ServiceNow's AI product NOW Assist surpassed $600 million in annual contract value in Q4, with expectations to exceed $1 billion by 2026, demonstrating the company's success in monetizing AI and solidifying its role in enterprise digital transformation.
See More
The SaaSpocalypse Moment for Tech Stocks
- Market Dynamics Analysis: On February 5, 2026, technology and software stocks are experiencing what is termed the 'SaaSpocalypse' moment, indicating market concerns about future growth in these sectors, which may lead investors to reassess their portfolios.
- Investor Reactions: Following the video's release, investors are reminded to consider the potential risks associated with tech stocks, which could prompt them to adjust their holdings in the short term to mitigate market volatility.
- Industry Outlook: The mention of the DeepSeek moment in the video suggests that the tech sector may be at a significant turning point, necessitating close monitoring of the financial health and market performance of relevant companies.
- Subscription and Promotion: The video encourages viewers to subscribe and click on a special offer link, indicating the content creator's intent to enhance audience engagement and increase platform influence and revenue.
See More
