This top software stock is down 60%, but Nvidia just strengthened the bull case.

Software stocks have been crushed this year, but has it gone too far? Salesforce, ServiceNow, Adobe and Inuit shares all trade at compelling valuations with still strong growth forecasts.

ServiceNow (NOW) reported earnings 30 days ago. What's next for the stock?

ServiceNow is rated Strong Buy after a ~50% 1Y price drop, driven by misunderstood M&A margin dilution and deferred Middle East revenue. NOW is transitioning from seat-based SaaS to a hybrid AI OS, leveraging volumetric token consumption and the Action Fabric to monetize third-party AI agent activity. Strategic acquisitions (Armis, Veza) position NOW as a leader in AI identity governance, but integration risks threaten its single-data-model architecture.

ServiceNow (NOW, Financials) shares climbed nearly 9% after the company introduced a broader artificial intelligence strategy at its Knowledge 2026 event and re

ServiceNow trades at a sub-1x PEG, offering 20%+ subscription growth, 35%+ FCF margins, and robust balance sheet strength. Agentic AI and orchestration via Action Fabric and Model Context Protocol are driving CIO-level adoption, as evidenced by 130% YoY growth in $1M+ Now Assist customers. Management targets +100 bps annual margin expansion and a path to Rule of 60 by 2030, with FY27 EPS forecasted at $5.45, above consensus.

Enterprise software is undergoing a major transformation driven by AI, unleashing unprecedented market expansion for platforms that are adopting autonomous architecture. A shift is underway, splitting the legacy Software-as-a-Service (SaaS) ecosystem into clear winners and losers, effectively ending the era of blanket multiples for cloud software.

ServiceNow (NOW) is positioned as a core enterprise AI infrastructure, not just a workflow software vendor. NOW's management targets $30B+ subscription revenue by 2030, 30%+ FCF margins, and 30% revenue growth, leveraging a $600B TAM. Nvidia CEO Jensen Huang endorses NOW as the 'AI enterprise operating system,' with Nvidia using ServiceNow internally.

Inside: five software stocks that map which businesses survive the AI Boom and which ones do not

ServiceNow is mispriced due to AI-driven SaaS sector fears, despite robust fundamentals and a differentiated business model. NOW posted strong Q1 results: 22% subscription revenue growth, 97% retention, and raised FY guidance, yet shares fell 16%. Hybrid pricing and accelerating AI revenue ($1.5B ACV target) de-risk near-term growth and counter the AI cannibalization thesis.