10 AI Stocks on the Market’s Radar

7. ServiceNow, Inc. (NYSE:NOW)

Number of Hedge Fund Holders: 104

​ServiceNow, Inc. (NYSE:NOW) is one of the 10 AI Stocks on the Market’s Radar. On December 17, Bernstein SocGen reiterated an “Outperform” rating on the stock with a $1,093.00 price target. Deeming NOW as the “cheapest large-cap software stock” after selloff, the firm sees the stock’s valuation as overly discounted compared to fundamentals and peers.

“The ‘cheapest’ large cap software stock?!? This is a title we didn’t think we’d ever write for a business we labeled as ‘the next Microsoft’. Yesterday we defended the potential Armis M&A that sent the stock down ~11%. Today we are reflecting on how cheap the stock is — ServiceNow’s Price to 3-year-out FCF (minus SBC) vs. growth rate (our model) is now below the most bearish AI-narrative impacted large cap application software peers like Adobe.”

Bernstein believes that the stock is severely undervalued despite demonstrating no signs of growth issues. It now trades at a lower valuation than Adobe, who has been the most impacted by AI fears. The stock is even trading below Salesforce, which has a weaker reputation.

“On this same basis, it is even trading below the reputation maligned-Salesforce that ServiceNow bears are comparing it to. We don’t see organic growth guide downs on the horizon, like mid-2022. In 2022, the guide down occurred in the midst of a bearish macro change, but current signals for 2026 are ‘normal’ IT demand.”

Meanwhile, management continues pointing toward accelerating demand, a view also supported by recent channel checks.

“Yes, if there is an unexpected macro shock, IT will probably be impacted (risks like AI-bubble popping, politics, etc.), but ironically the cost-efficiencies desired in a down market may still support demand for ServiceNow.”

ServiceNow, Inc. (NYSE:NOW) provides a platform that integrates workflows, data, and AI to coordinate how work flows across large organizations.