ServiceNow Just Plunged 18% on Earnings. Is This a Once-in-a-Cycle Buying Opportunity?

Shares of ServiceNow (NYSE:NOW | NOW Price Prediction) plunged roughly 18% on Thursday after the enterprise software giant’s Q1 2026 earnings sparked a flurry of price target cuts across Wall Street. Goldman Sachs, Jefferies, Piper Sandler, BTIG, Needham, Canaccord, and KeyBanc all slashed their targets, though most firms kept bullish ratings intact.

The core tension: bulls see ServiceNow as a durable compounder trading at a rare discount, while bears flag margin compression and Middle East deal slippage. For long-term investors, the revised outlook warrants a closer look, even as near-term volatility remains a real risk.

The Analyst’s Case

Goldman Sachs cut its ServiceNow stock price target to $163 from $188 while keeping a Buy, arguing ServiceNow remains well positioned as a “system of action” for AI-related spending. Jefferies trimmed to $135 from $175, saying sentiment could stay muted until the May 4 analyst day despite impressive AI traction.

Piper Sandler lowered its NOW stock price target to $140 from $200 (Overweight) and highlighted that management raised the Now Assist ACV target to $1.5B and called ServiceNow shares attractive at 5x EV/2027 revenue. Canaccord cut to $145 from $200, calling the reaction “a punitive reaction to a quarter that seemed fine” and blaming a 75 bps subscription drag from large on-premise Middle East deals slipping.

On the bearish side, KeyBanc kept Underweight and cut its ServiceNow stock price target to $85 from $115, citing Middle East slippage, skinnier cRPO upside, and margin guidance coming down due to acquisitions. BTIG also flagged weaker Q1 results and cRPO guidance below consensus. There’s also software sector sell-off to consider when trading NOW stock.

Company Snapshot

ServiceNow, led by CEO Bill McDermott, is an enterprise software platform for AI-driven workflow automation. Q4 FY25 subscription revenue grew 21% year over year to $3.466B, with cRPO up 25% to $12.85B and free cash flow reaching $2B.

Recent strategic moves for ServiceNow include the completed $7.75 billion Armis acquisition, Moveworks integration, and a pending Veza deal. ServiceNow’s board also authorized an additional $5B share repurchase in January.

Why the Move Matters Now

ServiceNow stock is down roughly 45% year to date, with Thursday’s drop pulling shares to about $85. Even after the plunge, the P/E ratio of 60x keeps valuation a live debate.

The May 4 analyst day is likely the next key catalyst for ServiceNow, where management can revisit AI monetization, margin trajectory, and the post-acquisition roadmap. The consensus analyst target still sits well above current levels, mirroring Morningstar’s unchanged fair value estimate of $165.52 on ServiceNow.

What It Means for Your Portfolio

For retirement-focused investors, ServiceNow stock offers a rare mix of AI leverage, $165 fair value estimate, and durable 20% growth, now at a more reasonable entry point. However, integration risk on Armis and Veza plus geopolitical deal timing argue for patience, not a rushed full position.

A measured approach to ServiceNow stock, sized with room to add after May 4, balances the bull case against genuine near-term headwinds. The persistence of Buy ratings alongside the price target cuts suggests Wall Street still sees durable upside over a multi-year horizon.