4. ServiceNow (NYSE:NOW)
Number of Hedge Fund Investors: 108
ServiceNow (NYSE:NOW) is another stock that Reddit communities and contrarian analysts believe should be considered instead of falling into the SaaSpocalypse bandwagon. The stock is down a whopping 35 percent so far in 2026 amid widespread fears that artificial intelligence will render enterprise software obsolete. The sell-off was triggered largely by Claude Cowork, the artificial intelligence assistant released by Anthropic, which punished the stock because of concerns about its plugins and labor replacement capabilities. However, bulls say the market reaction was a knee-jerk panic that misunderstands the company’s fundamental value.
Bulls reject the notion that ServiceNow (NYSE:NOW) is just simple software that can be easily replicated. ServiceNow is a giant serving 85 percent of the Fortune 500, companies that require far more than just code. It offers the deep product expertise, round-the-clock customer service, constant patching and security upgrades, and enterprise integration infrastructure that cannot be thrown together quickly. The argument that a developer in a garage could simply use artificial intelligence to spin up a ServiceNow (NYSE:NOW) replacement ignores the complexity and production-readiness required by the world’s largest enterprises.
Some recent reports suggest that companies, including Microsoft, have concluded that using artificial intelligence tokens at scale is not actually cheaper than employing humans. Microsoft disclosed that for certain types of work, it would have been cheaper to simply hire a human developer than to rack up the massive bills from artificial intelligence token consumption. This contradicts the pessimistic thesis and suggests that artificial intelligence may enhance rather than replace the value of enterprise software companies.
Burke Wealth Management stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2026 investor letter:
“ServiceNow, Inc. (NYSE:NOW): As a sector, enterprise software stocks peaked at the end of 2024, had a terrible 2025 and an even worse start to 2026. There has been very little distinction between single solution product companies and platform companies that orchestrate workflows across an entire enterprise. Valuations are at 10-year lows, and the prevailing viewpoint is that AI is going to obviate the need for legacy enterprise software subscriptions either by replacing existing software with vibe-coded solutions or by destroying the per seat business model that these companies were built on by eliminating the seats (human employees). Every time Anthropic releases a new set of tools, it seems like enterprise software stocks fall 5%. We have tried to manage through this environment by consolidating around what we view to be best of breed platform companies across different segments of the enterprise software stack (the raw data layer (SNOW), cyber security (CRWD), and multi-cloud platform solutions (NOW, CRM). Unfortunately, our efforts to discriminate between business models and high grade our holdings have not worked as the broader market is doing no such thing at the present time. The fact that each of the enterprise software companies in our portfolio have beaten earnings estimates consistently over the past year and are forecasting revenue acceleration in 2026 has not mattered either. In fact, this has only served to increase our level of frustration with the stock action. Service Now and Crowdstrike grew operating profit over 25% in 20025 while Snowflake more than doubled its operating profit from a somewhat depressed base….” (Click here to read the full text)
