The present season has witnessed a most unsettling tremor within the markets, particularly affecting those companies engaged in the provision of software. A prevailing apprehension, fueled by the novelty of Artificial Intelligence, threatens to unsettle even the most established firms. Investors, it seems, are disposed to a rather indiscriminate selling, sparing few within this sector, a circumstance one might observe with a mixture of concern and, perhaps, a degree of detached amusement.
The objections raised against these software enterprises rest upon three principal pillars. The first suggests that the increased efficiency promised by AI will necessitate a reduction in the number of clerks and functionaries employed, thereby diminishing the revenue streams of those companies who calculate their charges by the number of users. A rather blunt assessment, though not entirely without merit. Secondly, it is posited that organizations, emboldened by the capabilities of AI, will be inclined to construct their own bespoke solutions, bypassing the need for external vendors. A vanity project, one suspects, for few possess the resources or inclination to maintain such intricate systems. Finally, certain ambitious developers of these “large language models” appear to envision a world where the very need for software is obviated. A flight of fancy, surely, though one which has captured the imaginations of some.
These arguments, however, strike me as rather speculative. The pricing models of these software providers will, no doubt, adapt to the changing landscape, shifting perhaps from a reliance on individual “seats” to a calculation based on actual consumption. And while the creation of superficial software is readily achieved, the true expense lies in the ongoing maintenance, security, and governance – a burden most organizations are loath to assume. It is a truth universally acknowledged, that a prudent firm will outsource that which it does not excel at.
Indeed, it is far more likely that AI will not eliminate the need for software, but rather enhance its importance. AI, after all, requires structured data, and those companies who control that data, and the workflows within which it resides, are in a position of considerable advantage. The proper arrangement of information is, as always, the key to success.
There will, undoubtedly, be casualties amongst these software vendors, but those with established “moats” – built upon proprietary data and complex workflows – are best positioned to weather the storm. It is with this in mind that I venture to suggest ServiceNow (NOW 2.52%) represents a particularly judicious investment following this recent period of market unease.
A Company of Discernment
ServiceNow has become inextricably linked with the operations of its clientele, connecting data across various departments – information technology, human resources, and customer service. It is a system of record built upon sound principles of security, custom logic, and a meticulous audit trail. A firm foundation, one might say.
Moreover, the company has embraced AI with a degree of foresight, its “Now Assist” suite of solutions already generating an annual contract value of $600 million, with projections exceeding $1 billion by year’s end. This is contributing to an overall revenue growth exceeding 20% – a most respectable figure.
Furthermore, ServiceNow aspires to become a leader in “agentic AI orchestration” with its “AI Control Tower,” and has recently acquired AI cybersecurity firms Armis and Veza to strengthen its position regarding permissions and asset visibility – a matter of increasing importance in this evolving landscape. With agentic AI still in its infancy, this presents a significant opportunity for future growth.
With its stock currently trading 25% lower than at the start of the year, now presents a most opportune moment to acquire shares in a company poised to benefit from the ongoing advances in Artificial Intelligence. A prudent investor, one believes, would not wish to be left wanting.
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2026-03-22 23:32