ServiceNow (NYSE:NOW): Is this American SaaS company showing its peers how to overcome AI fears?

ServiceNow (NYSE:NOW) caught our eye at Stocks Down Under because we noticed shares had rebounded in the past couple of weeks at a time all other SaaS stocks were being sold off. Investors have fears AI tools will at best result in intense competition for customers, at worst send them the same way as Kodak and Blockbuster. It seems investors don’t have those fears, at least because of that factor. You could say it is because of the ‘software’ this company provides but that hasn’t stopped firms like Salesforce and Xero plunging.

What is the story here?

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Overview of ServiceNow (NYSE:NOW)

ServiceNow (NYSE: NOW) is a large U.S. enterprise software company best known for its workflow automation platform used by big organizations to run internal operations. Its core idea is simple but powerful: many large companies still manage internal processes—IT support, employee onboarding, security incidents, procurement requests—through fragmented tools, spreadsheets, and emails. ServiceNow provides a single digital platform that automates these workflows across departments.

The company began in 2004, founded by Fred Luddy who was a software engineer at enterprise software firm Peregrine Systems, which built IT management tools for corporations. After leaving that company, he believed enterprise software was overly complex and poorly designed.

His idea was to rebuild IT service management software from scratch in the cloud with a modern interface and a flexible workflow engine. The company timed its run perfectly with the pivot to the cloud away from on-premise software. It listed in 2012 and then expanded beyond IT support tools to enterprise-wide workflow software.

Today, companies use ServiceNow to manage things like IT tickets, employee service requests, cybersecurity incidents, customer service operations, HR processes, and increasingly AI-driven workflow automation across the enterprise. The company makes money primarily through subscription software licenses, meaning customers pay recurring fees to use the cloud platform.

The platform itself is often described as a “system of action” for enterprises. Instead of just storing data like a database or CRM, it coordinates work across systems, linking applications, teams, and approvals into automated processes. Compared to companies like Salesforce and Atlassian, ServiceNow’s niche is somewhat unique: it focuses on operational workflows that connect systems together.

How does this work in practice?

Imagine an employee at a large bank whose laptop stops working. Without a platform like ServiceNow, the employee might email IT, someone manually logs the issue, assigns it to a technician, orders parts, updates status via email, and tracks the problem in spreadsheets.

With ServiceNow, the entire process becomes an automated workflow:

The employee submits a ticket in a portal, the system categorises the issue using AI, routes it to the correct support team, triggers inventory checks, schedules a technician, updates the employee automatically and then tracks resolution metrics.

This same logic applies to hundreds of enterprise processes. Over time, ServiceNow expanded from IT service management (ITSM) into many other areas including IT management, security responses, customer service management, asset management and industry-specific workflows.

Why investors like it

ServiceNow is widely viewed as a high-quality enterprise SaaS business for a few reasons.

The company has very high recurring revenue because customers typically sign multi-year subscription contracts and build many internal processes on the platform, making it difficult to replace.

Once deployed across a company, switching away can be costly because hundreds of workflows may depend on it.

It also has strong expansion economics. A company might start by using ServiceNow only for IT support, then later add HR workflows, security tools, and customer service modules. That allows ServiceNow to increase revenue per customer over time.

In recent years, the company has been heavily promoting AI automation features, positioning itself as a platform that can orchestrate AI agents and automated workflows across the enterprise.

Even amidst the Saaspocolypse

Of course, 2026 has seen volatility for SaaS stocks and ServiceNow has been no different – it did see significant decline in early February with the roll out of the latest OpenAI and Anthropic models.

ServiceNow got caught in that even though its fundamentals didn’t really deteriorate. In its most recent earnings report the company delivered revenue growth of roughly 20% percent year-over-year and beat analyst expectations on both revenue and profit. It also maintained guidance that implies continued strong subscription growth through the year. In other words, the stock fell largely because investors were compressing valuations across the SaaS sector rather than because ServiceNow’s underlying business suddenly deteriorated.

The rebound began when investors started reassessing whether that AI disruption narrative had been overdone. Over the last couple of weeks several analysts and institutional investors argued that companies like ServiceNow are actually well positioned in an AI-driven environment. The company’s platform already sits at the centre of many large corporations’ internal workflows, coordinating processes across IT systems, HR departments, security teams, and customer operations. Instead of replacing those systems, AI tools often need a platform like ServiceNow to orchestrate tasks and automate decisions across multiple departments. That shift in thinking helped calm the earlier panic.

Another factor supporting the recovery was continued confidence from analysts and the company itself. Price targets largely remained high relative to where the stock fell during the selloff, which encouraged dip buyers. At the same time, software companies including ServiceNow emphasized share repurchases and long-term growth guidance, signaling that management did not see a structural change in demand.

Conclusion

For investors in collapsing SaaS stocks wondering if there’ll be an end to it, ServiceNow depicts this is a possibility. In ServiceNow’s case its investors initially assumed AI might disrupt SaaS business models and sold first, but as the dust settled it became clear that companies like ServiceNow still have strong growth, sticky enterprise customers, and a platform that may actually become more valuable as AI automation spreads across large organisations.

Of course, no SaaS stock won’t come out and make those claims. But the challenge for them is to actually deliver strong growth, sticky enterprise customers and a model that’ll be valuable in an AI-driven world. As Citrini’s Research noted, you don’t want to have a customer questioning a $500k renewal wondering if it can just build it inhouse. Clearly investors don’t think that’s the case with ServiceNow’s customers – or at least just not a lot of them.