Burry Analyzes Software Stocks' Risks and Opportunities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 7 hours ago
0mins
Should l Buy NOW?
Source: stocktwits
- Software Stock Series: Noted investor Michael Burry is conducting a series of analyses on the software industry, with the first focusing on office software companies, emphasizing unique perspectives on AI threats that are expected to impact market evaluations of related stocks.
- Defensive Stock Recommendations: Burry identifies Freshworks and Paycom Software as relatively defensive against AI disruption, with the former rated “Chapel” due to internal AI initiatives and budget-friendly strategies, while the latter is seen as a strong defense rated “Stone” due to its database interfacing with regulatory agencies.
- Risk Warnings: Burry cautions investors to avoid HubSpot and Workday, with the former facing significant risks due to its core SMB customer base being heavily disrupted by AI, and the latter being extremely vulnerable due to its legacy business model amid AI-driven seat losses.
- Innovative Rating Framework: Burry employs a unique “owners’ earnings” framework and AI Competitive Threat classification to rate 46 software and payments companies, highlighting the high-risk exposure to small businesses and the protective role of strong databases.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy NOW?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on NOW
Wall Street analysts forecast NOW stock price to rise
32 Analyst Rating
30 Buy
2 Hold
0 Sell
Strong Buy
Current: 90.500
Low
172.00
Averages
222.81
High
263.00
Current: 90.500
Low
172.00
Averages
222.81
High
263.00
About NOW
ServiceNow, Inc. provides an artificial intelligence (AI) platform for business transformation. The Company’s AI platform connects people, processes, data, and devices to increase productivity and maximize business outcomes. Its intelligent platform, the Now Platform, is a cloud-based solution that helps enterprises and organizations across public and private sectors digitize workflows. The workflow applications built on the Now Platform are organized into four primary areas: Technology, CRM and Industry, Core Business and Creator. Its products include IT Service Management, IT Operations Management, HR Service Delivery, ServiceNow AI Agents, AI Experience, Build Agent, ServiceNow AI Control Tower, AI Agent Fabric, RaptorDB, Workflow Data Fabric, Workplace Service Delivery, ServiceNow Platform Encryption, Telecommunications Service Operations Management, and others. The Company also offers identity security, helping organizations secure access across the enterprise.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Bank of America Restarts Buy Rating on ServiceNow with $130 Target
- AI Impact and Market Positioning: Analyst Tal Liani from Bank of America emphasizes that while AI disrupts the software landscape, ServiceNow is positioned to benefit from new AI solutions due to its critical role in enterprise workflows, indicating a strong market foundation.
- Revenue Growth Expectations: ServiceNow is projected to achieve revenue growth between 18% and 22% by 2028, driven by platform expansion and monetization of artificial intelligence, showcasing the company's adaptability and growth potential in a rapidly evolving market.
- Cash Flow and Profit Margins: Analysts expect ServiceNow's free cash flow margins to range between 35% and 37%, with management anticipating approximately 100 basis points of operating margin and free cash flow margin expansions by 2027, further enhancing the company's financial health.
- Market Attractiveness: Currently trading at 14x CY27E EV/FCF, ServiceNow demonstrates faster growth and superior profitability compared to peers, leading analysts to view the stock as attractive and worthy of investor attention.
See More
Market Valuation Hits 20-Year High Amid Inflation Fears
- Market Valuation Surge: The Schiller PE metric indicates that after a week of significant gains, the market is now at its highest valuation since the dot-com crash, reflecting investor concerns about future economic prospects.
- Treasury Yields Spike: The 30-year Treasury yield hit its highest level in nearly 20 years at 5.12%, while the 10-year note finished at 4.60%, indicating heightened inflation fears that may compel the Federal Reserve to raise rates in the near future.
- Small-Cap Stocks Hit Hard: The Russell 2000 index fell 2.44% to close at 2,793 on Friday, highlighting the vulnerability of small-cap stocks amid market volatility, which may lead investors to reassess their risk appetite.
- Commodity Market Turmoil: Gold and silver prices dropped 2.26% and 8.61% respectively, reflecting investor fears of potential rate hikes that diminished the appeal of safe-haven assets, further exacerbating market uncertainty.
See More
Major Premarket Stock Movements in Key Companies
- Regeneron Drug Trial Failure: Regeneron Pharmaceuticals saw its stock plummet over 11% after its skin cancer treatment failed to meet goals in a late-stage trial, potentially undermining investor confidence and future R&D funding.
- Macy's Stock Surge: Macy's shares jumped nearly 4% in premarket trading after a regulatory filing revealed that Berkshire Hathaway initiated a small position valued at approximately $55 million, raising speculation about investment lieutenant Ted Weschler's involvement.
- Dominion Energy Acquisition News: Dominion Energy's stock surged more than 12% following NextEra Energy's announcement of an all-stock acquisition deal, which is expected to create the world's largest regulated electric utility, significantly enhancing market presence.
- Bio Rad Laboratories Stock Spike: Bio Rad Laboratories' shares rose 13% after a Wall Street Journal report indicated that activist investor Elliott Investment Management has built a sizable stake in the company, although the exact size and Elliott's strategic vision remain undisclosed.
See More
Trump Intensifies Warnings to Iran, Crude Prices Surge
- Crude Price Surge: Following President Trump's stern warnings to Iran, crude oil prices approached two-week highs, indicating market sensitivity to geopolitical risks that could lead to increased energy costs and impact the global economy.
- Military Meeting Scheduled: Trump is expected to hold a Situation Room meeting on Tuesday to discuss military options regarding Iran, a move that may heighten market uncertainty and affect investor confidence and stock performance.
- U.S.-China Trade Agreements: Following a meeting between Trump and President Xi Jinping, multiple trade deals were announced, including China agreeing to purchase $17 billion in U.S. agricultural goods annually, which could help ease trade tensions and potentially boost related sectors.
- Market Pressure: U.S. stock futures faced pressure after a record-setting week, with S&P 500 and Nasdaq futures declining, reflecting investor caution ahead of the earnings season and ongoing geopolitical tensions.
See More
Burry Analyzes Software Stocks' Risks and Opportunities
- Software Stock Series: Noted investor Michael Burry is conducting a series of analyses on the software industry, with the first focusing on office software companies, emphasizing unique perspectives on AI threats that are expected to impact market evaluations of related stocks.
- Defensive Stock Recommendations: Burry identifies Freshworks and Paycom Software as relatively defensive against AI disruption, with the former rated “Chapel” due to internal AI initiatives and budget-friendly strategies, while the latter is seen as a strong defense rated “Stone” due to its database interfacing with regulatory agencies.
- Risk Warnings: Burry cautions investors to avoid HubSpot and Workday, with the former facing significant risks due to its core SMB customer base being heavily disrupted by AI, and the latter being extremely vulnerable due to its legacy business model amid AI-driven seat losses.
- Innovative Rating Framework: Burry employs a unique “owners’ earnings” framework and AI Competitive Threat classification to rate 46 software and payments companies, highlighting the high-risk exposure to small businesses and the protective role of strong databases.
See More
ServiceNow Shares Surge 4% Amid Trump Investment News
- Stock Surge: ServiceNow shares jumped 4% in overnight trading as investors reacted positively to President Trump's investment in the company, reflecting market optimism for a rebound in software stocks after significant declines.
- Retail Sentiment Shift: Retail sentiment for ServiceNow shifted from 'neutral' to 'extremely bullish' since last Friday, indicating increased confidence in reclaiming the key $100 level, especially after the stock rallied over 9% in the past two sessions.
- Bond Issuance Enhances Flexibility: ServiceNow completed a $4 billion bond sale last week, enhancing the company's funding flexibility for future investments and stock buybacks, which is expected to boost shareholder value.
- Strong Fundamentals: ServiceNow posted a 22% revenue growth in Q1, although the integration of Armis is expected to weigh on margins, the revenue growth and subscription forecasts exceeded analysts' expectations, demonstrating the strength of the company's fundamentals.
See More
Bank of America Restarts Buy Rating on ServiceNow with $130 Target
- AI Impact and Market Positioning: Analyst Tal Liani from Bank of America emphasizes that while AI disrupts the software landscape, ServiceNow is positioned to benefit from new AI solutions due to its critical role in enterprise workflows, indicating a strong market foundation.
- Revenue Growth Expectations: ServiceNow is projected to achieve revenue growth between 18% and 22% by 2028, driven by platform expansion and monetization of artificial intelligence, showcasing the company's adaptability and growth potential in a rapidly evolving market.
- Cash Flow and Profit Margins: Analysts expect ServiceNow's free cash flow margins to range between 35% and 37%, with management anticipating approximately 100 basis points of operating margin and free cash flow margin expansions by 2027, further enhancing the company's financial health.
- Market Attractiveness: Currently trading at 14x CY27E EV/FCF, ServiceNow demonstrates faster growth and superior profitability compared to peers, leading analysts to view the stock as attractive and worthy of investor attention.
See More
Market Valuation Hits 20-Year High Amid Inflation Fears
- Market Valuation Surge: The Schiller PE metric indicates that after a week of significant gains, the market is now at its highest valuation since the dot-com crash, reflecting investor concerns about future economic prospects.
- Treasury Yields Spike: The 30-year Treasury yield hit its highest level in nearly 20 years at 5.12%, while the 10-year note finished at 4.60%, indicating heightened inflation fears that may compel the Federal Reserve to raise rates in the near future.
- Small-Cap Stocks Hit Hard: The Russell 2000 index fell 2.44% to close at 2,793 on Friday, highlighting the vulnerability of small-cap stocks amid market volatility, which may lead investors to reassess their risk appetite.
- Commodity Market Turmoil: Gold and silver prices dropped 2.26% and 8.61% respectively, reflecting investor fears of potential rate hikes that diminished the appeal of safe-haven assets, further exacerbating market uncertainty.
See More
Major Premarket Stock Movements in Key Companies
- Regeneron Drug Trial Failure: Regeneron Pharmaceuticals saw its stock plummet over 11% after its skin cancer treatment failed to meet goals in a late-stage trial, potentially undermining investor confidence and future R&D funding.
- Macy's Stock Surge: Macy's shares jumped nearly 4% in premarket trading after a regulatory filing revealed that Berkshire Hathaway initiated a small position valued at approximately $55 million, raising speculation about investment lieutenant Ted Weschler's involvement.
- Dominion Energy Acquisition News: Dominion Energy's stock surged more than 12% following NextEra Energy's announcement of an all-stock acquisition deal, which is expected to create the world's largest regulated electric utility, significantly enhancing market presence.
- Bio Rad Laboratories Stock Spike: Bio Rad Laboratories' shares rose 13% after a Wall Street Journal report indicated that activist investor Elliott Investment Management has built a sizable stake in the company, although the exact size and Elliott's strategic vision remain undisclosed.
See More
Trump Intensifies Warnings to Iran, Crude Prices Surge
- Crude Price Surge: Following President Trump's stern warnings to Iran, crude oil prices approached two-week highs, indicating market sensitivity to geopolitical risks that could lead to increased energy costs and impact the global economy.
- Military Meeting Scheduled: Trump is expected to hold a Situation Room meeting on Tuesday to discuss military options regarding Iran, a move that may heighten market uncertainty and affect investor confidence and stock performance.
- U.S.-China Trade Agreements: Following a meeting between Trump and President Xi Jinping, multiple trade deals were announced, including China agreeing to purchase $17 billion in U.S. agricultural goods annually, which could help ease trade tensions and potentially boost related sectors.
- Market Pressure: U.S. stock futures faced pressure after a record-setting week, with S&P 500 and Nasdaq futures declining, reflecting investor caution ahead of the earnings season and ongoing geopolitical tensions.
See More
Burry Analyzes Software Stocks' Risks and Opportunities
- Software Stock Series: Noted investor Michael Burry is conducting a series of analyses on the software industry, with the first focusing on office software companies, emphasizing unique perspectives on AI threats that are expected to impact market evaluations of related stocks.
- Defensive Stock Recommendations: Burry identifies Freshworks and Paycom Software as relatively defensive against AI disruption, with the former rated “Chapel” due to internal AI initiatives and budget-friendly strategies, while the latter is seen as a strong defense rated “Stone” due to its database interfacing with regulatory agencies.
- Risk Warnings: Burry cautions investors to avoid HubSpot and Workday, with the former facing significant risks due to its core SMB customer base being heavily disrupted by AI, and the latter being extremely vulnerable due to its legacy business model amid AI-driven seat losses.
- Innovative Rating Framework: Burry employs a unique “owners’ earnings” framework and AI Competitive Threat classification to rate 46 software and payments companies, highlighting the high-risk exposure to small businesses and the protective role of strong databases.
See More
ServiceNow Shares Surge 4% Amid Trump Investment News
- Stock Surge: ServiceNow shares jumped 4% in overnight trading as investors reacted positively to President Trump's investment in the company, reflecting market optimism for a rebound in software stocks after significant declines.
- Retail Sentiment Shift: Retail sentiment for ServiceNow shifted from 'neutral' to 'extremely bullish' since last Friday, indicating increased confidence in reclaiming the key $100 level, especially after the stock rallied over 9% in the past two sessions.
- Bond Issuance Enhances Flexibility: ServiceNow completed a $4 billion bond sale last week, enhancing the company's funding flexibility for future investments and stock buybacks, which is expected to boost shareholder value.
- Strong Fundamentals: ServiceNow posted a 22% revenue growth in Q1, although the integration of Armis is expected to weigh on margins, the revenue growth and subscription forecasts exceeded analysts' expectations, demonstrating the strength of the company's fundamentals.
See More
