After trading near $210 last summer, tech giant ServiceNow Inc (NYSE: NOW) now sits in the $105-$115 range. The multi-month decline effectively halved the stock’s value, even though the company has consistently topped expectations in its quarterly reports.
The disconnect has puzzled some investors and worried many more. Sure, the company posted record revenue in its January report, but the stock has been relentlessly sold nonetheless. The culprit has been narrative fear, specifically around the impact of artificial intelligence (AI) on more traditional software businesses.
In ServiceNow’s case, the worry is that customers will be able to use AI to automate elements of the company’s workflow management platform themselves, which would seriously compress the company’s long-term growth runway. Hence, there has been a sharp re-rating over the past nine months.
However, with the stock now oversold to historical extremes, while revenue sits at an all-time high, that fear may have gone too far. Let’s jump in and see why the contrarian case is starting to gather some momentum.
AI As a Tailwind, Not a Threat
In its latest earnings report from late January, ServiceNow went to some length to show that AI is not eroding demand. Or at least, not to the level that the bears are claiming.
Management showed how subscription revenue growth remained strong, while offering solid forward guidance. Yes, ServiceNow's forward growth might not be accelerating dramatically, but it’s certainly not in structural decline.
More importantly, management began positioning AI not as a threat but as a tailwind, with CEO Bill McDermott arguing that AI doesn’t replace enterprise orchestration; rather, it depends on it.
In other words, as enterprises adopt AI, they still need workflow coordination, automation layers, and system integration, which is precisely where ServiceNow fits in. The market, however, will clearly need some convincing to buy into this, but there are signs the pendulum has started to swing.
Technicals Are Flashing Oversold
From a technical standpoint, the stock looked very oversold in late February. ServiceNow’s relative strength index (RSI) readings recently fell to extreme levels following last month’s report, marking one of the most washed-out readings in years.
It's rare to see a stock so deeply oversold while revenue is at an all-time high. And with shares already having had a 50% haircut, you have to be thinking the worst-case scenario is fully priced in.
Encouragingly, price action is starting to reflect this as it stabilizes. Shares have refused to make a new low since early February, and the chart is starting to show higher lows forming around the $100 level.
If that base can hold and momentum continues to improve, the narrative could shift quickly from ServiceNow being a possible “AI victim” to a potential “AI beneficiary.”
Analysts Are Backing The Bull Case
The other thing to consider is that while the stock chart might not look great, analyst sentiment remains firmly bullish. The team at Citizens has reiterated its Market Outperform rating in recent weeks, similar to Wells Fargo's Overweight rating and Bernstein's Outperform rating. A fresh price target of $237 from Citigroup implies potential upside well beyond 100% from current levels.
Even if the most aggressive price targets are taken with a pinch of salt, the broader message is clear: Wall Street isn’t worried about any serious structural damage to the underlying business. Instead, analysts continue to point to resilient guidance, growing traction in AI-enabled offerings, and strategic acquisitions as evidence that the company’s long-term positioning remains intact.
What Needs to Happen Next
However, for the recent price action to evolve into a sustained recovery, ServiceNow shares need to continue forming a base above $100 and add to the run of higher lows. This would signal that the bears have exhausted themselves and lack the conviction to take the stock down any further. At the same time, a decisive break below $100 would reopen downside risk and undermine the bull thesis.
Conversely, if buyers continue stepping in and momentum indicators keep turning higher, we could be looking at a serious comeback rally. Deeply oversold names that carry massive upside targets can move quickly once the bears step back.
Still, the setup is not without risk. ServiceNow’s revenue growth has slowed to its lowest pace in years, and it remains to be seen how well management can make AI work for the company, rather than against it. However, when a firm can consistently beat expectations, post record revenue, and still carry broad analyst support after losing 50% of its value, the risk-reward profile begins to look quite attractive.
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The article "ServiceNow Is Extremely Oversold, Yet Analysts See 100%+ Upside" first appeared on MarketBeat.
