This Under-the-Radar AI Stock Is Poised for 50% Upside

After a year that saw five of the Magnificent Seven companies underperform the S&P 500, disappointed investors are on the hunt for tech stocks that can provide their portfolios with greater potential upside.  

With concerns about a looming AI bubble, circular financing, and historically high valuations, it seems increasingly difficult to identify which tech companies are poised for profit. But one pick-and-shovel stock operating in the AI market may be the solution to these concerns. 

ServiceNow (NYSE: NOW) is a cloud-based Software-as-a-Service (SaaS) platform that uses AI and workflow automation to assist companies in managing and streamlining digital workflows across entire enterprises by automating tasks in IT, customer service, HR, and more.

Though it had dismal performance in 2025, its strong fundamentals and near-term catalysts support a bullish 2026.

Shares of NOW are down nearly 32% over the past year. That includes an approximately 10% loss to start 2026.

However, the company’s remarkable customer retention rate and exceptional earnings track record have led analysts to call for significant upside. 

ServiceNow Is at the Intersection of Software and AI

According to industry consultancy firm Grand View Research, the global enterprise software market size, which was estimated at nearly $264 billion in 2024, is projected to grow to more than $517 billion by 2030, good for a compound annual growth rate (CAGR) of 12.1%. 

At the same time, Grand View Research forecasts the global intelligent automation market to grow from more than $14 billion in 2024 to $44.74 billion by 2030, good for a CAGR of 22.6%.

That’s good news for ServiceNow. Founded in 2004 and headquartered in Santa Clara, California, the cloud computing company builds enterprise software that helps businesses automate manifold processes. 

The company’s flagship product suite—the Now Platform—aims to assist companies: 

• Digitize and automate across the enterprise
• Boost productivity with embedded analytics and AI in every app
• Quickly respond to business changes with new workflow apps built by business analysts and developers

The suite has achieved a noteworthy 98% customer retention rate, exceeding the SaaS industry average of 90% renewals. Much of this can be attributed to ServiceNow’s integration of AI into its Now Platform, which has led to strong revenue growth.

From Q3 2024 to Q3 2025, ServiceNow saw its top line grow from $432 million to $502 million, a more than 16% year-over-year increase. Following years of operating in the red, the company returned to a profit in 2019 with a modest net income of $627 million. By the end of FY 2024, that figure has grown more than 127% to $1.4 billion.

Shares of NOW failed to translate the company’s sound fundamentals into gains last year, with the market undergoing numerous AI-induced selloffs. But following a year with strong financials yet stock underperformance, 2026 is looking ripe for a reversal for ServiceNow’s shareholders.  

NOW’s Impressive Earnings Track Record

The last time ServiceNow missed on earnings expectations, President Donald Trump had just completed his first year in office, California had just legalized recreational marijuana, setting off a boom in cannabis stocks, and Russia had annexed Crimea. 

That was Q1 of 2018, and since then, ServiceNow has met or beat on earnings for 30 consecutive quarters. Q4 and full-year 2025 earnings are expected around Jan. 28.

Over that same period, the company missed revenue forecasts only three times. That has been enough to convince Wall Street that the streak is likely to continue. With trailing earnings per share (EPS) of $1.65, ServiceNow is expected to grow its full-year EPS by nearly 29% next year from $8.93 to $11.49.

What Wall Street Thinks of ServiceNow

Despite some concerns about the stock’s forward P/E ratio of 83.14, Wall Street is incredibly bullish on NOW. Of the 42 analysts covering the stock, 35 assign it a Buy rating, five assign it a Hold rating, and just two assign it a Sell rating. 

Overall, the stock receives a consensus Moderate Buy rating, with the analyst average 12-month price target of about $216 implying more than 57% potential upside.

Current short interest stands at just 1.65%, or 17 million of the 1 billion shares outstanding. Meanwhile, institutional ownership is higher than average at more than 87%, with inflows of $8.83 billion over the past 12 months, more than double that of the $4.25 billion in outflows. 

ServiceNow scores higher than 92% of the companies evaluated by MarketBeat, ranking 83rd out of 633 technology stocks.

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