ServiceNow (NOW) Stock Plunges 43% in 2026 — Time to Buy the Selloff?

Key Takeaways

Table of Contents

Oppenheimer slashed ServiceNow’s price target from $175 down to $130 but retained its Outperform rating
Shares have plummeted 43% in 2026, hovering near $88 per share
First-quarter results scheduled for April 22; analysts project $3.74 billion revenue, representing ~21% annual growth
Federal government contract obligations plunged 72% compared to last year’s Q1, creating pressure on cRPO metrics
Analyst projects NOW could achieve a milestone as the first enterprise software firm with 10%+ AI-driven revenue by Q4 2026

ServiceNow has experienced significant turbulence throughout 2026. Shares have tumbled approximately 43% since January, settling around $88 on Tuesday, as widespread anxiety over artificial intelligence disruption continues to pressure the enterprise software industry.

ServiceNow, Inc., NOW

Brian Schwartz, an analyst at Oppenheimer, reduced his price objective for NOW from $175 to $130, pointing to compressed valuation multiples throughout the software sector. Despite the downward revision, he maintained his Outperform recommendation.

Schwartz remains skeptical of the narrative suggesting AI will disrupt ServiceNow. Instead, he believes the enterprise could emerge as one of the most significant winners from the AI revolution in business software.

According to InvestingPro analysis, NOW’s intrinsic value sits at $130, indicating the shares may be trading below their fundamental worth at present price levels.

First Quarter Results Due April 22

Oppenheimer forecasts first-quarter revenue reaching $3.74 billion, marking roughly 21% growth versus the comparable period last year, alongside pro forma earnings of $0.96 per share. Schwartz indicated his channel checks suggested “some upside to consensus estimates.”

The investment firm highlighted notable weakness in the federal government vertical. Oppenheimer’s calculations show federal obligations contracted 72% year-over-year during Q1, landing at approximately $48 million — substantially below the three-year seasonal norm of $99 million.

Both a temporary government shutdown and difficult year-ago comparisons contributed to this decline. The weakness represents a continuing challenge for ServiceNow’s current remaining performance obligations (cRPO) metric, which investors monitor closely as a predictor of forthcoming revenue.

Apart from federal headwinds, industry feedback revealed reduced large-deal momentum and general public sector softness compared to the previous quarter.

However, these same industry sources indicated “accelerating usage growth and expansion activity for ServiceNow’s AI business,” Schwartz noted.

Artificial Intelligence Revenue Trajectory

ServiceNow maintains an impressive 77.5% gross profit margin and produced $4.6 billion in free cash flow during the trailing twelve months.

The organization has been embedding AI capabilities throughout its complete product suite, incorporating improvements to data connectivity, workflow automation, and security features — all provided at no extra charge to existing customers.

The company also introduced the Context Engine, a framework that leverages ServiceNow’s established data infrastructure to guide AI agent decision-making processes.

Wall Street remains divided on the outlook. Bernstein maintained its Outperform stance. JMP Securities elevated the stock to Market Outperform. Conversely, UBS downgraded shares to Neutral from Buy, expressing skepticism about the company’s AI competitive position. BTIG lowered its price objective while preserving its Buy recommendation.

Schwartz conceded that AI disruption concerns “may keep ServiceNow as a ‘show-me-stock’ post earnings.” Nevertheless, with investor sentiment approaching pessimistic extremes and shares down 43%, he considers the risk/reward profile appealing for investors with extended time horizons.

He anticipates ServiceNow will achieve a historic milestone as the first enterprise software company generating over 10% of total revenue from AI-related products, potentially by the fourth quarter of 2026.

The company reports quarterly results on April 22.

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