Wall Street's enthusiasm for artificial intelligence (AI) has cooled in 2026. Now, the market has swung toward concern for AI's downside implications.
One of these is that the technology will obliterate many software companies, and investor fears led to a sell-off in the sector. This has dropped share prices in two excellent businesses for the AI era, ServiceNow (NOW 2.15%) and Okta (OKTA 2.29%).
That has created an opportunity to buy these stocks at a compelling valuation. Here's why it makes sense to invest in these two companies right now.
Image source: Getty Images.
ServiceNow's strengths
ServiceNow focuses on automating business workflows. Wall Street worries that the company's platform lends itself to AI stepping in to replace it.
The reality is not so straightforward. ServiceNow's software has been using AI to perform workflow automation for some time now. This suggests customers want ServiceNow to handle AI integration and are unlikely to drop it in an effort to use AI on their own.
CEO Bill McDermott reinforced this idea, explaining why the technology is not a threat to his business: "AI doesn't replace enterprise orchestration. It depends on it." In other words, AI can't operate in a vacuum. It needs the coordination and oversight provided by ServiceNow to avoid making harmful business mistakes.
NYSE: NOW
Key Data Points
Customers realize this, and it's further validated by the company's performance. It ended 2025 with strong 21% year-over-year revenue growth to $13.3 billion. This helped 2025 net income rise to $1.7 billion compared to $1.4 billion in 2024.
ServiceNow forecast first-quarter subscription revenue to increase 22% year over year $3.7 billion. This indicates no slowdown in its business.
Okta's cybersecurity advantages
Okta shares dropped after Anthropic released AI security software, raising concerns that artificial intelligence can eventually replace cybersecurity platforms. But what Wall Street isn't considering is that businesses aren't suddenly going to drop essential protections for unproven AI alternatives.
Also, Anthropic's solution is designed to look for vulnerabilities in software, but that doesn't replace Okta's platform, which focuses on validating those who are supposed to have access to a client's IT systems. This keeps out bad actors; Anthropic's security update does not address this area.
NASDAQ: OKTA
Key Data Points
Okta is also evolving its platform to differentiate between legitimate AI agents and malicious hackers. This is a key capability in the AI age, where automation is increasingly taking independent action.
The company's performance validates this. In its fiscal third quarter, ended Oct. 31, 2025 revenue rose 12% year over year to $742 million. Net income increased to $43 million versus $16 million in the prior year, illustrating a strengthening bottom line.
Compelling valuations
With both ServiceNow and Okta shares down, their valuations are at a low point for the past year, as evidenced by their forward price-to-earnings ratios (P/E).
Data by YCharts.
This suggests now is a good time to buy. Both companies are seeing sales growth, positioning their stocks to experience an upswing over the long term after Wall Street's AI fears subside and a more measured perspective emerges.
