We're Moving Off the Sidelines and Buying More of This Holding
Here's what we’ll be looking at leading up to and in the company's earnings report on January 28.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
NOW | Buy | 210 | 131.50 | 1,435 | 3.4 |
After you receive this Alert and when the stock market opens, we will buy 210 shares of ServiceNow (NOW) at or near $131.50. Following the trade, NOW shares will account for roughly 3.4% of the Pro Portfolio’s assets.
We have sat on the sidelines as NOW shares crossed over to oversold levels, which also coincided with them moving past our $150 panic point. And when a stock becomes oversold, it doesn’t take much to initiate a rebound — a great example of that is what we’ve seen from Costco (COST) shares so far this year.
As we can see in the chart above, the continued selloff in software stocks pushed the oversold condition for NOW shares to an extreme level. Granted, some price target trimmings from the likes of Stifel and Wells Fargo didn’t help, but then again, their new targets, in the range of $200-$225, are a far cry from where the shares closed Thursday night.
Thoughts From Goldman and Citi
More recent Wall Street comments include Goldman Sachs initiating coverage on ServiceNow with a $205 target and a Buy rating. Much like us, Goldman sees ServiceNow benefiting from AI adoption in the enterprise, and we see its position in corporate workflow positioning it well to help companies overcome data silos, a known headwind for AI adoption.
Citi also opened up what it calls a “upside 30-day catalyst watch on NOW shares, as its channel checks indicate a “robust close” to the quarter due to “flush budgets.” Citi rates NOW a Buy with a $250 target.
What Our Focus Will Be When ServiceNow Reports Earnings
The date we’ll want to mark on our calendars is Jan. 28, which is when ServiceNow will report its December-quarter results. As we approach that date, we’ll want to assess comments on AI adoption, usage, and spending from those companies that report before ServiceNow.
Keep in mind, ServiceNow’s customer base spans more than 85% of the Fortune 500. What we’ll be looking for is the vector and velocity of those AI-related figures, and based on the collected signals we’ve collected that should be a line with a very positive slope, better known as “up and to the right.”
We expect ServiceNow management to lay out its rationale for acquiring identity security company Veza and cybersecurity company Armis in December. At the time, we shared our take that the move would improve ServiceNow’s competitive offering and allow it to benefit from the cyber-attack pain point. What we want to see now is a more concrete picture of how that will happen. Could ServiceNow say it will “share more details” during a 2026 Analyst Day? Certainly possible, and in 2025, that event was held in early May.
The other items that we'll be closely tracking from ServiceNow on Jan. 28 are its remaining performance obligations (RPOs), customer relationships, and renewal rates. The combination of those figures will tell us the degree to which the company is winning new business with existing customers and new ones. That combination will also tell us if ServiceNow can deliver on its RPO figure, exiting September, which stood at $24.3 billion, as well as the number of customers with a $5 million or higher average contract value, which stood at 553, and renewal rates at 97%.
When we examine those numbers, we will also want to do so by looking at the core ServiceNow business and then with Veza and Armis. What we do not want to see is a meaningful drop in those metrics for the core ServiceNow business. Based on rising AI and cloud budgets, that would be a sign we would not want to ignore.
Findings from research firm Teneo, published in mid-December, found that 68% of surveyed CEOs plan to increase AI spending this year. We’ll look for confirmation of that leading up to ServiceNow’s earnings as we pay close attention to AI-related comments across the companies reporting between Jan. 20 and the morning of Jan. 28.
One final thought to share, and it concerns ServiceNow’s share repurchase authorization, which stood at $2 billion exiting the September 2025 quarter. Reviewing the 10-Q for that quarter, we see the company repurchased 0.6 million shares at a split-adjusted price near $194. In the first nine months of 2025, those figures are 1.3 million and ~$191.
Based on what we see in the above chart, it’s likely ServiceNow stepped up its repurchase efforts in November and December. This suggests the company could announce a re-arming of that program when it reports later this month. Such an announcement would be nice positive as would some insider buying once the earnings window has come and gone.
Adjusting Our Panic Point
As we pick up these shares today, we will reset our panic point to $118 from $150. In terms of our price target, we’ll revisit that once we see ServiceNow’s updated set of business metrics.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long NOW.
