Tech stocks were riding high in recent years thanks to artificial intelligence, but the situation changed in 2026. Wall Street was gripped by fears that AI could make some technology companies obsolete. This led to a sell-off, particularly in the software-as-a-service (SaaS) sector.
Among the casualties was SaaS giant ServiceNow (NOW +1.58%). Its stock has plunged some 35% year to date. Although it was swept up in this sudden "SaaSpocalypse," ServiceNow's business is going strong. In fact, it has positioned itself to maintain success over the long haul.
Wall Street's overreaction to the AI threat is an opportunity for long-term investors to reap handsome returns on ServiceNow shares. Here's a deeper look at the company and why now looks like a good time to buy this growth stock.
Image source: The Motley Fool.
ServiceNow's answer to the AI threat
ServiceNow provides a SaaS platform enabling businesses to streamline workflows. This focus is why Wall Street believes it's vulnerable to AI. Artificial intelligence agents can automate many tasks, and that could make ServiceNow's digital solutions replaceable.
But this perspective doesn't account for the steps the company has taken to ensure its offerings remain relevant to customers. It embraced AI and incorporated the powerful technology into its platform, which includes partnerships with Anthropic and OpenAI. It also acquired Moveworks, a provider of AI agents to major corporations such as Toyota Motor and Unilever.
ServiceNow incorporated Moveworks into its Autonomous Workforce product, launched in February. This brings teams of AI bots together in one package that can execute a variety of workflow tasks automatically. For instance, Autonomous Workforce agents can resolve 90% of common IT support functions.
Customers don't need to bother with setting up AI agents when ServiceNow seamlessly delivers the technology. More importantly, the company possesses data and insights about each client's business-specific workflows. This allows its AI agents to operate with accuracy and compliance to a customer's requirements.
NYSE: NOW
Key Data Points
ServiceNow's strong business performance
ServiceNow's business results reveal clientele are embracing its capabilities in the AI era. Its 2025 sales rose an excellent 21% year over year to $13.3 billion with subscriptions accounting for $12.9 billion of that. Subscriptions provide a reliable source of recurring revenue, and the company expects 21% year-over-year growth to continue in 2026.
In addition, it ended 2025 with $28.2 billion in remaining performance obligations, which provides insight into the upcoming revenue to be earned from existing customer contracts. This sum represents robust 27% year-over-year growth.
Shares are down sharply from a 52-week high of $211.48 reached last year. If the stock can return to its high, that would be about double from where they are now.
ServiceNow's rising sales demonstrate the AI integration into its platform is working. AI competitors cannot easily replicate its offerings without the customer data to ensure tasks are completed correctly. With the drop in share price, now is the time to invest in this successful company for the potential of an outsized return on your investment.
