ServiceNow (NOW) in Focus as Bernstein Calls It the Cheapest Large-Cap Software Name

ServiceNow, Inc. (NYSE:NOW) is 1 of the AI Stocks connected the Market’s Radar. On December 17, Bernstein SocGen reiterated an “Outperform” standing connected the banal with a $1,093.00 terms target. Deeming NOW arsenic the “cheapest large-cap bundle stock” aft selloff, the steadfast sees the stock’s valuation arsenic overly discounted compared to fundamentals and peers.

“The ‘cheapest’ ample headdress bundle stock?!? This is simply a rubric we didn’t deliberation we’d ever constitute for a concern we labeled arsenic ‘the adjacent Microsoft’. Yesterday we defended the imaginable Armis M&A that sent the banal down ~11%. Today we are reflecting connected however inexpensive the banal is — ServiceNow’s Price to 3-year-out FCF (minus SBC) vs. maturation complaint (our model) is present beneath the astir bearish AI-narrative impacted ample headdress exertion bundle peers similar Adobe.”

Image by drobotdean connected Freepik

Bernstein believes that the banal is severely undervalued contempt demonstrating nary signs of maturation issues. It present trades astatine a little valuation than Adobe, who has been the astir impacted by AI fears. The banal is adjacent trading beneath Salesforce, which has a weaker reputation.

“On this aforesaid basis, it is adjacent trading beneath the estimation maligned-Salesforce that ServiceNow bears are comparing it to. We don’t spot integrated maturation usher downs connected the horizon, similar mid-2022. In 2022, the usher down occurred successful the midst of a bearish macro change, but existent signals for 2026 are ‘normal’ IT demand.”

Meanwhile, absorption continues pointing toward accelerating demand, a presumption besides supported by caller transmission checks.

“Yes, if determination is an unexpected macro shock, IT volition astir apt beryllium impacted (risks similar AI-bubble popping, politics, etc.), but ironically the cost-efficiencies desired successful a down marketplace whitethorn inactive enactment request for ServiceNow.”

ServiceNow, Inc. (NYSE:NOW) provides a level that integrates workflows, data, and AI to coordinate however enactment flows crossed ample organizations.

While we admit the imaginable of NOW arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.

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Disclosure: None.