Investors Warned of Potential AI Infrastructure Bubble
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 21 2026
0mins
Should l Buy NOW?
Source: Fool
- AI Infrastructure Bubble Warning: Bill Gurley of Benchmark cautioned investors in a CNBC interview about a potential AI infrastructure bubble, recommending a shift towards undervalued SaaS stocks, which could mitigate investment risks and enhance return potential.
- SaaS Stock Recovery Signals: NYU Professor Scott Galloway expressed that fears surrounding SaaS stocks are overblown, suggesting it is a good time to buy, which may attract more investor interest in the sector and potentially drive stock rebounds.
- ServiceNow's Sustained Growth: ServiceNow continues to grow its revenue by over 20% and has shown strong momentum in AI solutions, despite its stock price declining nearly 25% year-to-date, indicating its core position in IT and HR makes it a valuable long-term investment.
- Workday's AI Contract Value Doubling: Workday's annual contract value for AI solutions doubled to $100 million last quarter, and although its stock has fallen over 35% year-to-date, its leadership in HR and finance data and mid-term growth expectations still attract investor interest.
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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: 103.640
Low
172.00
Averages
222.81
High
263.00
Current: 103.640
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.
Palantir's Market Performance with AI Platform
- Sustained Revenue Growth: Palantir Technologies has experienced accelerated revenue growth for 10 consecutive quarters, indicating strong demand for its AI platform among commercial customers, although its forward price-to-sales ratio of 47 suggests limited upside potential in the near term.
- UiPath's Transition: UiPath is transitioning from a pure robotic process automation (RPA) company to an agentic AI orchestration platform with its Maestro platform, which can manage both software bots and third-party AI agents, potentially saving customers money and enhancing market competitiveness.
- ServiceNow's AI Opportunity: As a leader in IT workflow and automation, ServiceNow has launched the AI Control Tower to enhance its AI agent orchestration capabilities, and its acquisitions of Armis and Veza will add crucial security components, positioning it for significant future growth.
- Attractive Valuations: While Palantir's valuation is high, UiPath and ServiceNow trade at forward price-to-sales ratios of 3 and 6.5 respectively, with ServiceNow growing revenue at a rate of 20%, highlighting their investment potential and attractiveness in the AI sector.
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Palantir's High Valuation vs. UiPath and ServiceNow's AI Potential
- Palantir's Growth Momentum: Palantir Technologies has experienced consistent revenue growth for 10 consecutive quarters, attracting numerous commercial clients to its AI platform; however, its forward price-to-sales ratio of 47 indicates a high valuation that may limit medium-term upside potential.
- UiPath's Transformation Opportunity: UiPath is transitioning from a pure robotic process automation (RPA) player to an agentic AI orchestration platform with its Maestro platform, which can manage both software bots and third-party AI agents, potentially saving customers money and driving annual recurring revenue (ARR) growth, although the company is still in the early stages of its AI agent opportunity.
- ServiceNow's AI Potential: As a leader in IT workflow and automation, ServiceNow recently launched AI Control Tower to serve as an AI agent orchestration layer, with acquisitions of Armis and Veza enhancing its security components, which could become a significant growth driver for the company.
- Market Valuation Comparison: While Palantir's valuation is considered excessive, UiPath's forward price-to-sales ratio is 3 and forward price-to-earnings ratio is 13, indicating its stock is attractive, whereas ServiceNow trades at a forward price-to-sales ratio below 6.5 and a forward price-to-earnings ratio under 24, with a revenue growth rate of 20%, making it more competitive in the market.
See More
Iran War's Impact on Markets and Oil Prices
- Market Shock from War: Since the outbreak of the Iran war on February 28, West Texas Intermediate (WTI) crude oil prices have surged by 48.67% to $99.64 per barrel, raising inflation concerns and exposing investors to a potential 20% market decline risk.
- Rising Treasury Yields: The 10-year and 30-year Treasury yields are climbing due to war-driven inflation expectations, impacting borrowing costs and exacerbating investor panic, particularly for long-term investors facing a challenging environment.
- Tech Sector Turmoil: Amid market volatility, tech stocks, especially the 'Magnificent Seven', have faced significant declines, with Intuit, Applovin, and Gartner dropping 37%, 43.4%, and 38% respectively, highlighting the sector's vulnerability to changing market sentiments and AI competition.
- Shift in Investor Sentiment: As uncertainty looms over the market's future, investors feel increasingly helpless, with many opting to exit, particularly in light of the potential for rising oil prices, leading to a substantial loss of confidence in equities.
See More
Investment Opportunities in the SaaS Sector
- Market Growth Potential: Thoma Bravo forecasts a 20% annual growth rate for the SaaS sector over the next few years, indicating that despite current valuation declines, fundamentals are improving, potentially offering a favorable buying opportunity for investors.
- ServiceNow's Competitive Edge: As a core tool for IT departments, ServiceNow continues to grow at a 20% rate through its generative AI suite, Now Assist, and the newly launched Control Tower platform, with an attractive forward P/E of 25 times, highlighting its valuation appeal.
- Salesforce's Market Positioning: Salesforce's leadership in customer relationship management is bolstered by its Data 360 feature, which integrates third-party data; despite a forward P/E of just 14 times, it is expected to achieve stable double-digit revenue growth, showcasing its potential in the AI era.
- Workday's Value Rebound: Although Workday's stock has dropped about 40% year-to-date, its forward P/E is only 12 times, and it maintains low double-digit revenue growth, suggesting that its investments in AI applications may lay the groundwork for future recovery.
See More
SaaS Stock Sell-Off May Present Generational Buying Opportunity
- Market Opportunity Analysis: Thoma Bravo suggests that the recent sell-off in SaaS stocks may create a generational buying opportunity, with an expected annual growth rate of 20% over the next few years indicating improving fundamentals despite current valuation declines.
- Industry Growth Comparison: SaaS companies within the S&P 500 are growing their revenues at three times the rate of firms in other sectors, coupled with significantly higher gross margins, which enhances their competitive edge in the market.
- Winners in the AI Era: Thoma Bravo emphasizes that while not all software companies will survive the AI disruption, those with deep domain expertise in SaaS are likely to emerge as winners in the forthcoming agentic AI age.
- Individual Stock Performance Analysis: Companies like ServiceNow, Salesforce, and Workday are strategically positioning themselves in the AI landscape and maintaining revenue growth, showing potential for future success, especially as their valuations have dropped to attractive levels.
See More
The Evolving Dynamics of a Market During Wartime
Market Impact of Iran Conflict: The ongoing Iran war has led to a correction in U.S. stock markets, with the Dow Jones Industrial Average experiencing its longest losing streak since May 2022, as investors grapple with the potential for a prolonged conflict and rising oil prices.
Cybersecurity Threats: U.S. companies, particularly in the tech sector, are facing increased cyberattacks linked to Iranian state-backed groups, which could disrupt operations and erode consumer trust, while also drawing attention to vulnerabilities in critical infrastructure.
Fertilizer Supply Concerns: The conflict has caused a significant rise in fertilizer prices and raised concerns about supply shortages for the upcoming planting season, potentially impacting crop yields and food prices globally.
Geopolitical Developments: Ongoing tensions in Ukraine and delayed U.S.-China talks highlight the complex geopolitical landscape, with implications for trade and international relations as the U.S. navigates multiple global conflicts.
See More
Palantir's Market Performance with AI Platform
- Sustained Revenue Growth: Palantir Technologies has experienced accelerated revenue growth for 10 consecutive quarters, indicating strong demand for its AI platform among commercial customers, although its forward price-to-sales ratio of 47 suggests limited upside potential in the near term.
- UiPath's Transition: UiPath is transitioning from a pure robotic process automation (RPA) company to an agentic AI orchestration platform with its Maestro platform, which can manage both software bots and third-party AI agents, potentially saving customers money and enhancing market competitiveness.
- ServiceNow's AI Opportunity: As a leader in IT workflow and automation, ServiceNow has launched the AI Control Tower to enhance its AI agent orchestration capabilities, and its acquisitions of Armis and Veza will add crucial security components, positioning it for significant future growth.
- Attractive Valuations: While Palantir's valuation is high, UiPath and ServiceNow trade at forward price-to-sales ratios of 3 and 6.5 respectively, with ServiceNow growing revenue at a rate of 20%, highlighting their investment potential and attractiveness in the AI sector.
See More
Palantir's High Valuation vs. UiPath and ServiceNow's AI Potential
- Palantir's Growth Momentum: Palantir Technologies has experienced consistent revenue growth for 10 consecutive quarters, attracting numerous commercial clients to its AI platform; however, its forward price-to-sales ratio of 47 indicates a high valuation that may limit medium-term upside potential.
- UiPath's Transformation Opportunity: UiPath is transitioning from a pure robotic process automation (RPA) player to an agentic AI orchestration platform with its Maestro platform, which can manage both software bots and third-party AI agents, potentially saving customers money and driving annual recurring revenue (ARR) growth, although the company is still in the early stages of its AI agent opportunity.
- ServiceNow's AI Potential: As a leader in IT workflow and automation, ServiceNow recently launched AI Control Tower to serve as an AI agent orchestration layer, with acquisitions of Armis and Veza enhancing its security components, which could become a significant growth driver for the company.
- Market Valuation Comparison: While Palantir's valuation is considered excessive, UiPath's forward price-to-sales ratio is 3 and forward price-to-earnings ratio is 13, indicating its stock is attractive, whereas ServiceNow trades at a forward price-to-sales ratio below 6.5 and a forward price-to-earnings ratio under 24, with a revenue growth rate of 20%, making it more competitive in the market.
See More
Iran War's Impact on Markets and Oil Prices
- Market Shock from War: Since the outbreak of the Iran war on February 28, West Texas Intermediate (WTI) crude oil prices have surged by 48.67% to $99.64 per barrel, raising inflation concerns and exposing investors to a potential 20% market decline risk.
- Rising Treasury Yields: The 10-year and 30-year Treasury yields are climbing due to war-driven inflation expectations, impacting borrowing costs and exacerbating investor panic, particularly for long-term investors facing a challenging environment.
- Tech Sector Turmoil: Amid market volatility, tech stocks, especially the 'Magnificent Seven', have faced significant declines, with Intuit, Applovin, and Gartner dropping 37%, 43.4%, and 38% respectively, highlighting the sector's vulnerability to changing market sentiments and AI competition.
- Shift in Investor Sentiment: As uncertainty looms over the market's future, investors feel increasingly helpless, with many opting to exit, particularly in light of the potential for rising oil prices, leading to a substantial loss of confidence in equities.
See More
Investment Opportunities in the SaaS Sector
- Market Growth Potential: Thoma Bravo forecasts a 20% annual growth rate for the SaaS sector over the next few years, indicating that despite current valuation declines, fundamentals are improving, potentially offering a favorable buying opportunity for investors.
- ServiceNow's Competitive Edge: As a core tool for IT departments, ServiceNow continues to grow at a 20% rate through its generative AI suite, Now Assist, and the newly launched Control Tower platform, with an attractive forward P/E of 25 times, highlighting its valuation appeal.
- Salesforce's Market Positioning: Salesforce's leadership in customer relationship management is bolstered by its Data 360 feature, which integrates third-party data; despite a forward P/E of just 14 times, it is expected to achieve stable double-digit revenue growth, showcasing its potential in the AI era.
- Workday's Value Rebound: Although Workday's stock has dropped about 40% year-to-date, its forward P/E is only 12 times, and it maintains low double-digit revenue growth, suggesting that its investments in AI applications may lay the groundwork for future recovery.
See More
SaaS Stock Sell-Off May Present Generational Buying Opportunity
- Market Opportunity Analysis: Thoma Bravo suggests that the recent sell-off in SaaS stocks may create a generational buying opportunity, with an expected annual growth rate of 20% over the next few years indicating improving fundamentals despite current valuation declines.
- Industry Growth Comparison: SaaS companies within the S&P 500 are growing their revenues at three times the rate of firms in other sectors, coupled with significantly higher gross margins, which enhances their competitive edge in the market.
- Winners in the AI Era: Thoma Bravo emphasizes that while not all software companies will survive the AI disruption, those with deep domain expertise in SaaS are likely to emerge as winners in the forthcoming agentic AI age.
- Individual Stock Performance Analysis: Companies like ServiceNow, Salesforce, and Workday are strategically positioning themselves in the AI landscape and maintaining revenue growth, showing potential for future success, especially as their valuations have dropped to attractive levels.
See More
The Evolving Dynamics of a Market During Wartime
Market Impact of Iran Conflict: The ongoing Iran war has led to a correction in U.S. stock markets, with the Dow Jones Industrial Average experiencing its longest losing streak since May 2022, as investors grapple with the potential for a prolonged conflict and rising oil prices.
Cybersecurity Threats: U.S. companies, particularly in the tech sector, are facing increased cyberattacks linked to Iranian state-backed groups, which could disrupt operations and erode consumer trust, while also drawing attention to vulnerabilities in critical infrastructure.
Fertilizer Supply Concerns: The conflict has caused a significant rise in fertilizer prices and raised concerns about supply shortages for the upcoming planting season, potentially impacting crop yields and food prices globally.
Geopolitical Developments: Ongoing tensions in Ukraine and delayed U.S.-China talks highlight the complex geopolitical landscape, with implications for trade and international relations as the U.S. navigates multiple global conflicts.
See More
