Wall Street's AI Concerns Create Buying Opportunity for ServiceNow and Okta
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy NOW?
Source: Fool
- ServiceNow's Market Performance: ServiceNow achieved $13.3 billion in revenue for 2025, reflecting a 21% year-over-year growth, demonstrating a robust business foundation in the AI era despite ongoing market concerns about AI replacing its platform.
- Okta's Cybersecurity Edge: In the fiscal third quarter of 2025, Okta's revenue rose 12% to $742 million, with net income increasing from $16 million to $43 million, indicating strong demand for its cybersecurity solutions in the age of AI.
- Valuation Appeal: With both ServiceNow and Okta's stock prices declining, their current price-to-earnings ratios are at a low point for the past year, suggesting that now is an opportune time for investment, with expectations of a rebound in the future.
- Integration of AI Technology: ServiceNow's CEO emphasized that AI relies on enterprise orchestration, indicating that its platform is indispensable for AI integration, further solidifying its market position.
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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: 109.300
Low
172.00
Averages
222.81
High
263.00
Current: 109.300
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.
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- Expansion of Enterprise Contracts: The company is expanding its enterprise contracts, coupled with a current backlog of $13 billion, indicating strong market demand and future revenue potential, further solidifying its market position.
- Market Performance Analysis: Despite a recent pullback in ServiceNow's stock price, analysts believe that strong execution and ongoing growth will enable significant investment returns in the coming years, especially in the competitive tech industry.
- Investment Recommendations: Although ServiceNow was not included in The Motley Fool Stock Advisor's top investment picks, its potential in the AI sector and market demand still make it a stock worth monitoring, prompting investors to evaluate carefully.
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- Expansion of Enterprise Contracts: The company is expanding its enterprise contracts, which, alongside increasing customer demand, is anticipated to further drive revenue growth and strengthen its position in the industry.
- Robust Backlog: ServiceNow currently boasts a $13 billion backlog, providing a solid foundation for future revenue growth and indicating strong market demand for its products and services.
- Growth Potential by 2026: If the company can maintain a growth rate above 20% and ensure strong execution, a significant rebound in stock prices by 2026 becomes more realistic than many market participants expect.
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- Bank Stocks Plummet: The collapse of UK private lender Market Financial Solutions Ltd raised fears of rising defaults, leading to significant declines in bank stocks, with Morgan Stanley and Goldman Sachs both down over 7%, indicating instability within the financial sector.
- Economic Data Impact: The US January PPI rose 0.5% month-over-month, exceeding expectations of 0.3%, while the Chicago PMI unexpectedly increased to 57.7, demonstrating economic resilience, although market speculation regarding Fed rate cuts was dampened.
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- Infrastructure Expansion: OpenAI will leverage Amazon Web Services (AWS) infrastructure, committing to deploy 2 gigawatts of Trainium AI chips, which not only boosts OpenAI's computational capabilities but also presents new growth opportunities for Amazon's cloud services business.
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Investor Concerns: The decline has raised concerns among investors, particularly regarding the potential impact of artificial intelligence on traditional software businesses, leading to a sharp re-rating of the stock.
AI Positioning: Management is positioning AI as a tailwind rather than a threat, emphasizing that AI does not replace enterprise operations but rather enhances them, which could shift investor sentiment positively.
Analyst Sentiment: Despite the stock's poor performance, analysts maintain a bullish outlook, with some suggesting a potential upside of over 100% from current levels, indicating confidence in the company's long-term positioning.
See More
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- Market Weakness: The S&P 500 index fell by 0.61%, the Dow Jones Industrial Average dropped by 1.17%, and the Nasdaq 100 index decreased by 0.41%, reflecting investor concerns over the disruptive potential of AI, which has put overall market sentiment under pressure.
- Producer Prices Rise: The US January Producer Price Index (PPI) increased by 0.5% month-over-month and 2.9% year-over-year, exceeding expectations, indicating rising inflationary pressures that could influence the Fed's interest rate decisions and increase market uncertainty.
- Strong Economic Data: Despite the market downturn, the February Chicago PMI unexpectedly rose to 57.7, signaling signs of economic expansion, which may alleviate some investor concerns about a slowdown in economic growth.
- Airline Stocks Under Pressure: With WTI crude oil prices reaching a 6.5-month high, airline stocks are generally declining, with United Airlines down over 8%, reflecting the potential threat of rising fuel costs on airline profitability.
See More
ServiceNow's AI Integration Accelerates, Bright Future Ahead
- Accelerating AI Integration: ServiceNow is rapidly accelerating its AI integration, which is expected to drive future growth, particularly in 2026, where a sustained growth rate above 20% could lead to a significant stock price rebound.
- Expansion of Enterprise Contracts: The company is expanding its enterprise contracts, coupled with a current backlog of $13 billion, indicating strong market demand and future revenue potential, further solidifying its market position.
- Market Performance Analysis: Despite a recent pullback in ServiceNow's stock price, analysts believe that strong execution and ongoing growth will enable significant investment returns in the coming years, especially in the competitive tech industry.
- Investment Recommendations: Although ServiceNow was not included in The Motley Fool Stock Advisor's top investment picks, its potential in the AI sector and market demand still make it a stock worth monitoring, prompting investors to evaluate carefully.
See More
ServiceNow Accelerates AI Integration, Optimistic Outlook
- Accelerated AI Integration: ServiceNow is rapidly integrating artificial intelligence, and despite a sharp pullback in stock prices, this strategy is expected to enhance its market competitiveness and attract more enterprise clients.
- Expansion of Enterprise Contracts: The company is expanding its enterprise contracts, which, alongside increasing customer demand, is anticipated to further drive revenue growth and strengthen its position in the industry.
- Robust Backlog: ServiceNow currently boasts a $13 billion backlog, providing a solid foundation for future revenue growth and indicating strong market demand for its products and services.
- Growth Potential by 2026: If the company can maintain a growth rate above 20% and ensure strong execution, a significant rebound in stock prices by 2026 becomes more realistic than many market participants expect.
See More
US Stocks Decline on Friday, Bank Stocks Plummet
- Market Decline: The S&P 500 index closed down 0.43% on Friday, with the Dow Jones Industrial Average falling 1.05% and the Nasdaq 100 down 0.30%, reflecting heightened investor concerns over the disruptive potential of AI, which has negatively impacted market confidence.
- Bank Stocks Plummet: The collapse of UK private lender Market Financial Solutions Ltd raised fears of rising defaults, leading to significant declines in bank stocks, with Morgan Stanley and Goldman Sachs both down over 7%, indicating instability within the financial sector.
- Economic Data Impact: The US January PPI rose 0.5% month-over-month, exceeding expectations of 0.3%, while the Chicago PMI unexpectedly increased to 57.7, demonstrating economic resilience, although market speculation regarding Fed rate cuts was dampened.
- Rising Oil Prices Pressure: WTI crude oil prices surged over 2% to a 7-month high due to President Trump's pessimistic remarks on Iranian nuclear negotiations, exacerbating geopolitical risks that could further impact airline profits, leading to declines in related stocks.
See More
Amazon and OpenAI Forge $50 Billion Strategic Partnership
- Massive Investment Commitment: Amazon has announced a strategic partnership with OpenAI worth up to $50 billion, including an initial investment of $15 billion, with an additional $35 billion contingent on OpenAI meeting specific milestones, significantly enhancing Amazon's competitive edge in the AI sector.
- Infrastructure Expansion: OpenAI will leverage Amazon Web Services (AWS) infrastructure, committing to deploy 2 gigawatts of Trainium AI chips, which not only boosts OpenAI's computational capabilities but also presents new growth opportunities for Amazon's cloud services business.
- Market Competitive Advantage: This partnership positions Amazon more favorably against competitors like Microsoft and Google in the AI market, particularly by gaining access to powerful AI models from OpenAI, which could drive innovation in its consumer products.
- Long-term Strategic Layout: The collaboration with OpenAI not only supplements existing AI technologies but may also foster further cooperation in emerging areas like agentic commerce, demonstrating Amazon's commitment to long-term investments in the AI domain.
See More
ServiceNow Is Significantly Undervalued, Analysts Predict Over 100% Growth Potential
Stock Performance: ServiceNow's stock has significantly declined from around $210 last summer to the current range of $105-$115, despite consistently exceeding quarterly revenue expectations.
Investor Concerns: The decline has raised concerns among investors, particularly regarding the potential impact of artificial intelligence on traditional software businesses, leading to a sharp re-rating of the stock.
AI Positioning: Management is positioning AI as a tailwind rather than a threat, emphasizing that AI does not replace enterprise operations but rather enhances them, which could shift investor sentiment positively.
Analyst Sentiment: Despite the stock's poor performance, analysts maintain a bullish outlook, with some suggesting a potential upside of over 100% from current levels, indicating confidence in the company's long-term positioning.
See More
US Stocks Decline as AI Disrupts Markets
- Market Weakness: The S&P 500 index fell by 0.61%, the Dow Jones Industrial Average dropped by 1.17%, and the Nasdaq 100 index decreased by 0.41%, reflecting investor concerns over the disruptive potential of AI, which has put overall market sentiment under pressure.
- Producer Prices Rise: The US January Producer Price Index (PPI) increased by 0.5% month-over-month and 2.9% year-over-year, exceeding expectations, indicating rising inflationary pressures that could influence the Fed's interest rate decisions and increase market uncertainty.
- Strong Economic Data: Despite the market downturn, the February Chicago PMI unexpectedly rose to 57.7, signaling signs of economic expansion, which may alleviate some investor concerns about a slowdown in economic growth.
- Airline Stocks Under Pressure: With WTI crude oil prices reaching a 6.5-month high, airline stocks are generally declining, with United Airlines down over 8%, reflecting the potential threat of rising fuel costs on airline profitability.
See More
