ServiceNow (NYSE:NOW) stock is up about 2.5% in after-hours trading, getting a lift from Atlassian (NASDAQ:TEAM), whose strong earnings and upbeat outlook are spilling over into the broader enterprise software space. Atlassian’s results are helping ease some of the pressure that has been weighing on the group, suggesting that demand trends remain intact even as investors debate how AI will reshape the industry.
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That backdrop matters for ServiceNow, which was hit hard following its latest earnings report, despite delivering solid top-line growth and raising its subscription revenue outlook. Investors instead zeroed in on delays in large deals, particularly in the Middle East, alongside higher costs tied to AI investments and recent acquisitions, which weighed on margin expectations. At the same time, the broader shift toward AI-first spending models has left parts of the market questioning whether legacy SaaS platforms can defend their budgets as new tools emerge.
Barclays’ Raimo Lenschow takes a more constructive stance, arguing that the reaction reflects timing and macro noise rather than any structural change in the story. The analyst points out that “the first quarter is always a seasonally small quarter,” while geopolitical tensions and spending caution created additional friction, making it difficult to draw long-term conclusions from a single quarter. In his view, the key question is whether growth is slowing due to AI headwinds or whether the company simply had a slower start to the year, and he makes it clear where he stands, noting that “we are in the latter camp.”
Lenschow also pushes back on the idea that ServiceNow is at risk of being disrupted, emphasizing that its position within customer workflows gives it a durable edge. The analyst describes the company as “one of the best-positioned software names,” adding that its deep integration into enterprise IT systems should make it “an integral part of the new AI world.” Rather than being displaced, he sees ServiceNow as benefiting from the shift, particularly as AI capabilities become embedded across its platform.
At the same time, Lenschow acknowledges that investors are likely to remain cautious in the near term, suggesting that shares could stay range-bound as the market looks for clearer signs of AI monetization and sustained growth. Still, the analyst sees a path toward improving sentiment, pointing to the upcoming analyst day and a stronger contribution from AI products later this year and into 2027. As those elements start to come through, he believes the stock can “start to react better again,” especially given where it now sits from a valuation standpoint following the recent pullback.
Lenschow backs that view with a Buy rating on NOW stock, and his $132 price target implies ~49% upside from current levels. (To watch Lenschow’s track record, click here)
Overall, Wall Street continues to lean decisively bullish on ServiceNow despite the recent volatility. The stock carries a Strong Buy consensus rating based on 37 analyst reviews, with 32 Buys, 4 Holds, and just 1 Sell. The average 12-month price target stands at $138.06, which implies about 56% upside. (See NOW stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.