ServiceNow Crashed 25% In One Year: Generative AI Will Catalyze 80% Gains According to One Wall Street Guru
ServiceNow has shed a quarter of its value while software stocks bleed out across the sector, yet one Wall Street analyst just slapped an outlier target on it that implies an 82% surge from here. The bull case and the…
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ServiceNow (NYSE:NOW | NOW Price Prediction) currently trades at $136.11, and Wall Street’s average analyst price target is $144.99. That puts the stock about 6.5% below consensus.
ServiceNow runs the Now Platform, enterprise workflow and AI orchestration software that management sells as the “AI Control Tower for business reinvention.” The consensus gap is small, while the top of the range sits far higher. Bernstein’s Peter Weed holds the Street-high $248.00 target with an Outperform rating, and that target sits roughly 82% above the current price.
Investors now weigh whether generative AI turns ServiceNow into a software winner or another casualty of the selloff in software stocks.
An 82% Street-High Target on a Software Stock Down 25%
Reported profits fell hard as ServiceNow kept buying companies, and that drove the decline. Second-quarter operating income dropped 54.75% year over year to $162 million. GAAP subscription gross margin fell to 73.5%, down from 80%. Three things caused it: amortization tied to the Armis and Veza deals, rising stock-based compensation, and business-combination costs.
Shares are down 25.41% over the past year and sit about 29.5% below the 52-week high of $192.97. Part of that is sector-wide: investors have rotated out of high-multiple software on fears that generative AI commoditizes SaaS. Estimates also fell. Over the trailing 30 days, analysts made 35 down revisions to third-quarter EPS and only 3 upward ones. Some U.S. federal revenue moved from Q3 into Q2, which makes the third quarter a harder comparison.
AI Contract Value Just Topped $1 Billion, Which Keeps Bulls on Board
Analysts are largely positive: 10 assign the top rating, 35 recommend buying, 2 say hold, 1 say sell and 1 assign the lowest rating. Bernstein’s thesis rests on three things. First, ServiceNow can make money from generative AI copilots in IT, customer service and HR workflows. Second, CIOs will move more of their software onto one platform. Third, 20%+ ACV growth can come with wider margins.
The latest quarter supports that case. ServiceNow AI annual contract value exceeded a billion, and management says it is on track to beat its one and a half billion ACV by the end of 2026 target. Customers running agentic AI in production grew 9x over the last nine months. Deals worth more than $1 million in net new ACV reached 123, and cRPO rose 21% to $13.20B.
Management raised full-year subscription revenue guidance to $15,760–$15,780 million. By 2030, it targets $30.00 billion or more in subscription revenue, with AI making up 30% of ACV. Revisions to 2027 EPS are close to even, with 18 upward moves in seven days and 19 cuts over 30 days.
There is reason for doubt. The 2026 EPS consensus has fallen to $4.0667 from $4.1230 90 days ago. Bernstein’s target is also an outlier that sits well above the consensus.
Salesforce Offers More Consensus Upside Than ServiceNow
The whole peer group sold off alongside ServiceNow.
Salesforce (NYSE:CRM) is down 12.65% year to date and 11.2% over the past month. Trading at $229.79 versus a $283.36 average target, it has about 23.3% implied upside. Of 55 analysts, 38 rate it Buy or better and 15 rate it Hold.
Workday (NASDAQ:WDAY) is down 20.09% over one year. Trading at $188.96 versus a $208.26 target, it has about 10.2% upside. Analysts are split, with 19 Holds against 20 Buy-or-better ratings.
Salesforce has the most upside to its consensus target, with ServiceNow last of the three. ServiceNow’s appeal comes from its high-end targets.
ServiceNow Trails the S&P 500 by a Wide Margin This Year
ServiceNow is down 11.15% year to date while the S&P 500 is up 13.63%. Over one year, the stock has lost 25.41% as the index gained 15.79%.
Across 49 analysts, the average target of $144.99 implies just 6.5% upside. The stock trades at 28x forward earnings versus 86x trailing. Targets reflect analyst opinions and can change.
I Lean Bullish on ServiceNow, With Margins as the Tripwire
If AI ACV keeps growing toward the one and a half billion goal and operating margin reaches the guided 31.5%, the optimistic scenario gains traction. Risks mount if Armis integration costs keep eating into GAAP profits, or if the federal pull-forward produces a weak Q3.
Revenue still growing 24.0% at 28x forward earnings is a combination worth researching further. The $248.00 target needs everything to go right. Consensus is the more realistic anchor.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
