ServiceNow: A Trillion-Ruble Dream

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The market, that grand bazaar of hopes and anxieties, now boasts a mere handful of companies valued in the eleven-figure realm. Eleven! As if such abundance were not a sufficient mockery of prudence. Most of these titans are, predictably, entangled with the new god, Artificial Intelligence – a deity of silicon and algorithms, demanding constant sacrifice of capital. One begins to suspect the priests of this new faith are particularly adept at collecting offerings.

Investors, ever the hopeful pilgrims, cast their gaze upon the smaller shrines, seeking the next miracle. And so they turn to ServiceNow, a company promising transformation, a veritable alchemist of the digital age. Its CEO, a man named Bill McDermott, has declared his firm a trillion-dollar enterprise in the making. A bold pronouncement, indeed. One might even say… optimistic. As if merely declaring a value alters the immutable laws of finance.

The AI Control Tower: A Bureaucracy in the Clouds

ServiceNow began, as so many things do, with a simple desire to manage information technology. A modest ambition, one might think. But it swelled, as all things touched by human ambition must, into a sprawling empire encompassing customer service, security, human resources, finance, legal matters… truly, a digital reflection of the most labyrinthine bureaucracy ever conceived. They boast a clientele that includes eighty-five percent of the Fortune 500 – a figure that suggests either remarkable efficiency or a deeply entrenched system of dependencies.

The company acquires smaller entities with the enthusiasm of a collector of porcelain dolls, each purchase adding another layer of complexity. Recently, they absorbed Moveworks and Armis, cybersecurity providers, for sums that would make even a Tsarist minister blush. Some fret over the price tags, but one must remember: a well-defended fortress, even a digital one, is worth its weight in rubbles. Though, of course, the architects of such fortresses always seem to profit handsomely.

ServiceNow, with the swiftness of a phantom, integrated generative AI into its services. Their Now Assist AI solution, they claim, has reached $600 million in annual contract value, with ambitions to surpass a billion. Numbers, numbers… they dance before the eyes like mischievous imps. One wonders if these figures are based on actual value or the collective fever dream of the market.

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All of this converges within their “AI Control Tower” – a grandiose title for what appears to be a centralized hub for managing AI agents, models, and workflows. It’s a system designed to impose order upon the chaos of artificial intelligence, a task akin to herding cats… or, perhaps more accurately, attempting to manage a parliament of unruly bureaucrats.

IDC, a firm that specializes in predicting the future (a notoriously unreliable profession), estimates enterprises will spend $1.3 trillion on agentic AI-enabled applications by 2029. ServiceNow aims to capture a significant share of this windfall. A perfectly reasonable ambition, provided, of course, that the market doesn’t decide to pursue a different path entirely.

Mr. McDermott has pledged his commitment to ServiceNow until 2030 and beyond. “There’s one reason I did this,” he declared. “Overwhelming belief in this company.” A statement that could be interpreted as either genuine conviction or a masterful display of self-preservation. One suspects it’s a bit of both.

More Than Words: A Share Repurchase and a Curious Valuation

Mr. McDermott didn’t merely offer his continued service; he also authorized a $5 billion share repurchase, including $2 billion in accelerated repurchases. A signal to the market, perhaps, that he believes the stock is undervalued. Or, perhaps, a clever attempt to prop up the price before the inevitable correction. It’s difficult to say with certainty.

Indeed, ServiceNow appears to be a reasonably attractive investment at present. Subscription revenue grew by 19.5% in the fourth quarter, exceeding expectations. Adjusted operating margin expanded, and their AI services showed momentum. All encouraging signs, though one must always remain skeptical of such optimistic reports.

Some investors expressed disappointment with the 2026 outlook, citing projected subscription revenue growth of 20.5% to 21%. A modest figure, especially after accounting for acquisitions and currency fluctuations. Concerns about increased spending on acquisitions are also warranted, though management assures us they are finished with large purchases… for now.

The stock has fallen amidst a broader sell-off of SaaS companies, fueled by fears that AI will render many software companies obsolete. A legitimate concern, though ServiceNow appears well-positioned to adapt and thrive in this new landscape. They have embraced AI quickly and are enabling businesses to integrate it into their platforms.

With the company’s enterprise value falling to less than 6.5 times revenue estimates for 2026, the stock appears to offer a reasonable value relative to its potential growth. Whether it will actually reach a trillion-dollar valuation remains to be seen. But it certainly seems to be worth more than its current price. One can only hope that the market, in its infinite wisdom (or lack thereof), will eventually recognize this simple truth.

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2026-02-11 12:22