ServiceNow: Hedge Funds Sell the Vision as Analysts Buy the Numbers

Hedge funds trim holdings amid SaaSpocalypse fears, but 90% of analysts rate buy with 50% upside; subscription revenue jumps 19%, AI suite up 130%.

The race to become the central nervous system of enterprise AI is producing a curious split in ServiceNow’s stock. Institutional investors are heading for the exits, but the analyst community is hanging on. The result is a share price that seems stranded between two competing narratives.

For the quarter ended March 2026, 108 hedge funds held ServiceNow positions — ten fewer than the prior period. The stock has given up roughly six percent over the past month, trading at €83.38. That puts the relative strength index at 41.9, not yet in oversold territory but uncomfortably close. The selloff reflects a broader industry anxiety dubbed the “SaaSpocalypse”: the fear that generative AI will hollow out traditional per-seat licensing models as companies build their own software faster than they buy it.

ServiceNow’s own product story, however, runs in the opposite direction. The company is betting that the real bottleneck for large enterprises isn’t smarter AI models — it’s orchestration, governance and integration across dozens of isolated applications. The vision, unveiled at its Knowledge conference in May, is an autonomous workforce of digital agents that execute entire business processes without human hand-holding. CIOs are drowning in fragmented AI silos, and ServiceNow wants to be the command centre that ties them together.

The numbers back up the operational momentum. Subscription revenue hit $3.67 billion in the first quarter, a 19 percent increase, and the company guided for full-year subscription revenue of $15.74 billion to $15.78 billion — growth of 22 to 22.5 percent. The Now Assist product suite, which embeds AI into workflows, posted growth of more than 130 percent. Management has set a long-term revenue target of $30 billion by 2030, describing it internally as conservative.

Analysts are broadly buying the story. Ninety percent of the 50 analysts tracked by CNN rate the stock a buy, with an average price target of $135 — though that target has been revised down about 23 percent over the past three months. Benchmark’s Yi Fu Lee raised his own target to $130 on June 15, calling ServiceNow “one of the cleanest operational models in the SaaS sector.” On the other side of the Atlantic, brokers cite an average target of €123.82, implying upside of nearly 50 percent from current levels. The annualised volatility of about 79 percent, however, underscores just how much uncertainty remains priced in.

That uncertainty stems partly from the competitive landscape. Salesforce, Microsoft, SAP and Google are all jostling to control the same agent-orchestration layer. ServiceNow has full visibility into decisions made on open cloud platforms such as AWS and Azure, but closed environments like SAP, Workday and Salesforce present real barriers. Data can’t be streamed in real time to an external controller, and the question of who pays for compute, who monitors the agent and whose roadmap sets the next function remains unresolved. In practice, many enterprises now have five different AI chiefs — none of whom sees the full picture.

ServiceNow has been working to strengthen its ecosystem. Cognizant integrated its Neuro-AI-Trust product into the ServiceNow environment earlier this month, aiming to create a unified governance system for the full lifecycle of AI agents. IBM is also a partner in the space. But the challenge of compatibility — especially on the closed platforms where the most sensitive enterprise data lives — is far from solved.

The existential fear that AI will kill SaaS margins adds another layer. Columbia Global Technology Growth Fund called ServiceNow a “prominent victim” of the broad revaluation of SaaS business models in its first-quarter investor letter. The per-seat licensing model is under structural pressure as hyperscale AI solutions gain traction with large corporate clients. Yet ServiceNow continues to deliver subscription growth that would be the envy of most software companies.

The next big test arrives on June 30, when the company reports second-quarter earnings. If the operational momentum can overcome the structural doubts, the gap between the stock’s current price and the analysts’ average target might begin to close. Until then, the vision of absolute control over enterprise AI agents remains compelling in theory — and deeply discounted in practice.