Analysts See 80% Upside for ServiceNow, 63% for Microsoft
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- S&P 500 tech stocks have sold off sharply this year — the index is down ~6.5% YTD and the Nasdaq is off ~10% — as investors price in the risk that AI agents could undercut demand for software from industry leaders.
- ServiceNow has plunged 58% from prior highs, yet 42 of 46 covering analysts rate it a buy with an average price target of $188, implying roughly 80% upside; Q4 subscription revenue grew 21% year-over-year, and the company disclosed 85 billion workflows in flight across Fortune 2000 customers.
- ServiceNow generated over $2 billion in free cash flow on $3.5 billion in Q4 revenue — a 57% FCF margin — and management pegs its long-term addressable market at $600 billion, with 2026 subscription revenue expected to grow nearly 20% year-over-year.
- Microsoft is down 35% from its highs, with analysts' average price target of $589 implying ~63% upside; Microsoft Cloud revenue grew 26% YoY last quarter, and management said demand for AI compute continues to exceed available capacity.
- Microsoft 365 consumer cloud revenue rose 29% YoY, with management crediting part of the gain to higher average revenue per user from AI features like Copilot — evidence the source frames as AI enhancing rather than derailing the company's growth trajectory.
Why it matters: If the analyst targets are right, ServiceNow shareholders could see 80% returns and Microsoft holders 63% — but that thesis requires AI to expand rather than erode enterprise software moats, a view contradicted by the 58% and 35% drawdowns both stocks have already suffered on AI-disruption fears and the broader ~10% Nasdaq decline.
