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The Second Wave of AI. ServiceNow Introduces AI Passport for Monitoring AI Agents.

Hello, everyone,

While many investors fear that AI could put pressure on traditional software providers, I see exactly the opposite happening with many of them.

Many companies are reinventing themselves, and in my opinion, this includes the company featured in today’s presentation.

My personal opinion is that we are now at the beginning of the second wave .

This wave is all about monetizing AI through new products.

Regarding the second wave, I’ll now turn to my Portfolio 2036 .

And I’ll introduce you to some of my favorites here. Of course, none of this is investment advice—just my own stock picks.

I’d like to start with ServiceNow $NOW (+2,49%)

I’d love to hear your thoughts in the comments—I’m especially interested in what you think about the second wave.

ServiceNow (NOW) has reinvented itself. What was once known as an IT service management platform now positions itself as the central operating system for AI in the enterprise.

“The AI control tower for the corporate world “

India’s cyber agency has confirmed, for the first time, cases in which AI agents went undetected during tests, infiltrating production enterprise systems and accessing confidential data. ServiceNow unveiled the “AI Passport” at virtually the same time:

ServiceNow was an early adopter of AI-powered workflow solutions and is gradually shifting its business model toward hybrid pricing models that account for the actual use of AI features. At the same time, analysts expect margins to continue rising.

CEO Bill McDermott is driving the transformation toward AI-powered enterprise software solutions.

On October 15, ServiceNow introduced AI Passport, a control and governance layer for AI agents in enterprises.

The company denied reports of interest in acquiring the AI startup Decagon and reaffirmed its focus on organic growth.

Mizuho and TD Cowen raised their price targets to $170 and $165, respectively; Oppenheimer reaffirmed its “Outperform” rating and also raised its target to $165.

AI Passport Focuses on Controlled AI Agents

With AI Passport, ServiceNow aims to enable companies to control the permissions of AI agents while they are running. The cryptographically signed digital identity specifies which data an agent is allowed to access and which actions it may perform in multi-step workflows. Additional governance features are also designed to make deployed AI traceable and link costs to results. AI Passport, the detection of unauthorized “shadow AI,” and AI Cost Management are expected to become available in the fourth quarter of 2026. Nvidia is involved as a design and launch partner.

At the same time, ServiceNow expanded EmployeeWorks: this will enable employees to create AI agents for their tasks. The new development environment, ToolSmith, is designed to accelerate the creation of complex tools. With this, the company addresses both the control of enterprise-wide agents and their practical use in day-to-day work.

ServiceNow describes AI Passport as an authorization layer that verifies the permissible scope of AI agents and MCP servers during multi-step workflows. In the event of deviations, graduated responses—up to and including the termination of an agent—are possible.

Growth drivers include new software solutions, increasing monetization of AI offerings, and further gains in market share. Analysts view the development of Now Assist particularly positively. The generative AI solution is already leading to larger contract wins and is generating significant interest among enterprise customers. At the same time, AI agents are becoming increasingly important, opening up additional areas of application for the platform.

Mizuho raised its price target from $140 to $170, citing the prospect of strong third-quarter results as well as the importance of AI and cloud spending. TD Cowen raised its target from $140 to $165. The firm cited high software demand, cross-selling, and solid government contracts, among other factors, as supportive. Oppenheimer reaffirmed its “Outperform” rating and also set the price target at $165. Quarterly results are expected later this month.

ServiceNow is a U.S.-based software company and one of the leading providers of cloud-based enterprise software for IT service management and workflow automation. ServiceNow develops and markets the Now Platform, which enables companies to digitize and automate IT, human resources, customer service, and other business processes.

In the Subscription segment, ServiceNow generates by far the largest share of its revenue from recurring subscription fees for the Now Platform and its modules, such as IT Service Management, IT Operations Management, HR Service Delivery, Customer Service Management, and, more recently, AI-powered solutions such as Now Assist, which are billed to business customers on a monthly or annual subscription basis. In the Professional Services & Other segment, the company provides implementation, consulting, training, and configuration services related to the Now Platform, which help customers deploy and customize the software.

ServiceNow benefits from the structural growth of enterprise software and the AI boom, which is driving demand for workflow automation. The company reports high renewal rates and is one of the fastest-growing major software companies worldwide.

Net revenue by revenue source is broken down into subscription sales (97%) and professional services (3%).

Net revenue is distributed geographically as follows: North America (62.9%), Europe/Middle East/Africa (25.6%), and Other (11.5%).

Number of employees: 29,187

ServiceNow Investor Relations — Überblick & Neueste Updates

Oct. 28, 2026

Q3 2026 Earnings Report

Earnings Reports & Dividends

Brief Overview

Strong growth: Revenue is expected to rise from $13.3 billion in 2025 to approximately $22.9 billion in 2028.
Operational Scaling: According to the forecast, the EBIT margin is expected to improve from 31.25% to 33.30%.
Strong Cash Flow: Free cash flow (FCF) is expected to reach $8.5 billion in 2028—a high level of cash flow generation for a software company.
Notable Trends: For 2026, MarketScreener forecasts nearly stagnant net income and a decline in earnings per share, even though revenue and EBIT are rising significantly. Strong earnings growth is expected to resume starting in 2027.

Important: The table reflects the forecast figures reported on MarketScreener. Especially for net income and EPS, it’s worth comparing these figures with the upcoming quarterly results and updated consensus estimates.

Brief Analysis for Portfolio 2036

FC Yield rises: from 3.01% to 6.20%. This indicates an increase in free cash flow generation relative to the company’s value.
P/E ratio drops significantly starting in 2027: despite expected earnings growth, ServiceNow remains expensively valued with a P/E ratio of 46.4 for 2028.
P/B ratio falls: The price-to-book ratio falls from 12.3 to 5.92. However, a lower price-to-book ratio does not automatically mean a favorable valuation for a software company.
View the PEG ratio with caution: The negative value for 2026 is not very meaningful. The values for 2027 and 2028 are 1.4 and 1.2, respectively.

My conclusion: ServiceNow combines strong expected growth with a high valuation. For a long-term “Portfolio 2036” approach, the key factor is whether the company can continue to boost its growth through AI products and automation while simultaneously increasing free cash flow. The declining valuation multiples assume that the earnings forecasts will actually be met.

The most stable metric for ServiceNow stock is operating cash flow, which is used below for the valuation. The P/CF ratio (price-to-cash-flow ratio) stands at 29.24 , which is 12.55 points below the historical average of 41.80 over the past 10 years. From this perspective, ServiceNow stock appears to be to be undervalued .

The fair value of ServiceNow stock is calculated using the 10-year valuation period selected above. In this case, the average P/CF ratio is 41.80.

Multiplying this by the operating cash flow per share of $5.13 over the last 4 quarters yields a fair value of $214.41. The current price of $150.01 is 30.0% below this fair value, which represents a undervaluation of the stock.

(Source: AKTIENFINDER)

Oct. 16, 2026, 6:53:45 PM •

Lang & Schwarz (EUR)

125.55 EUR

$NOW (+2,49%)

20 Comentários

Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

I am and will remain convinced and on board. 🫡 To me, it’s a clear winner based on the existing data set and deep integration with customers.

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Tenbagger-Capital@Tenbagger-Capital

@Get_Rich_or_Die_Tryin Thanks, my friend, for your take on this. @Dividendenopi and I are already on the lookout, too.

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Keineui@Keineui

@Get_Rich_or_Die_Tryin Same here. Retail price €86—unfortunately, I didn't buy nearly enough. Just looking at the potential these have in our company, there's still a lot more to come. But I think $CRM is just a tad better.

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@Keineui My cost basis is a bit lower than yours at €91.77. But there's definitely huge potential. It's funny—I'm really not that into classic CRM software like $CRM and $SAP. 😅

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Ricola@Roccola601

As you know, I view this development as very positive 🙏🏼

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Tenbagger-Capital@Tenbagger-Capital

@Roccola601 We actually agree a lot

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Ricola@Roccola601

That doesn't necessarily mean it's a good thing, hahaha 😂 but I'm really looking forward to hearing your perspective on things and how they're developing! 🙏🏼✨

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Homer@Simpson

We're in on this—that's great! Viva Tenbagger 🥳

Thanks for your post 😊👍

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Tenbagger-Capital@Tenbagger-Capital

@Simpson Mega, you're all in. So it's bound to be a success. You've got a good nose for 🚀

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Tenbagger-Capital@Tenbagger-Capital

@Simpson Thanks for the coins

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Dividendenopi👴@Dividendenopi

As always, a very nice review from you. After our conversation this afternoon, I actually expected this review to come. 😇😉Strong stock—fundamentally, it’s definitely a solid play. Expensive, but worth the money. Your “visions” are very, very exciting, just like our discussion about them. My wife is already complaining that I’m talking to you more than I am to her🤭😂. I’m just as optimistic as you are about this stock, but I’m not quite convinced yet—I’m looking forward to the next earnings report and hoping—sorry to all the investors out there—for a pullback. But maybe I’ll stay completely out of it personally, and we can talk about whether we want to include the stock in the project.

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Tenbagger-Capital@Tenbagger-Capital

@Dividendenopi I guess it's time to get some flowers for your wife. But I hope that our collaboration will pay off in the end, and I think your wife should be able to benefit from that as well. But if I were her, I might also be a little concerned—if our collaboration is more important to you. As for ServiceNow, we can still consider two tranches.

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Dividendenopi👴@Dividendenopi

@Tenbagger-Capital Don't always take everything so literally. 😉 And if there's one thing she doesn't like, it's flowers. Right at the beginning of our relationship, I brought her a bouquet from the weekly market. She threw it right back in my face and snapped, "What are you up to, trying to butter me up...?"

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Chris@Multibagger

My top pick in the software sector. I hope it will dip back toward $120 as the tech sell-off continues. If it does, I’d build up another long-term position. During the last software sell-off, I successfully traded it three times in both directions.

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Raketentoni@Raketentoni

You wanted Mika’s opinion, so here it is :)

Hi Tenbagger,

The basic premise is quite valid this time: Companies will not only deploy AI agents, but will also have to control their identities, permissions, costs, and actions. With its workflows, CMDB, and deep integration into business processes, ServiceNow is indeed in an interesting position to do this.

Still, some of the statements could use a little less marketing hype and a little more substance.

**1. ServiceNow hasn’t “reinvented itself”**

ServiceNow has its roots in IT service management and workflow automation. It is precisely this existing platform that is now being expanded to include AI agents, governance, and security features.

This makes strategic sense, but it’s more of a logical evolution than a reinvention. A company that has been orchestrating digital workflows, access rights, and enterprise systems for years doesn’t suddenly need to change its business model for AI agents.

The marketing department has simply rebranded the “workflow platform with AI” as the “central operating system for enterprise AI.” Of course, that sounds better on stage, but it’s not yet an independently verified market standard.

**2. AI Passport exists—but it’s not yet a proven moat**

The product description is largely accurate. AI Passport is intended to provide AI agents and MCP servers with cryptographically signed credentials. During a multi-step process, the system verifies which data and actions are permitted. In case of deviations, agents can be restricted, redirected, or terminated.

Nvidia is a design and launch partner. Enforcement is to be carried out, among other things, via Nvidia’s Open Agent Safety Platform. However, AI Passport, Shadow AI Detection, and AI Cost Management are not expected to be available until the fourth quarter of 2026.

This is an important detail: What is being presented here is not a product that has been tested over several years, but rather the announcement of a new architecture. It remains to be seen whether it will function reliably from a technical standpoint, be widely adopted by customers, and generate sustained additional revenue as a result.

After all, a digital ID doesn’t automatically make an agent well-behaved. It only works as well as the configured permissions, integrations, control points, and actual enforcement.

**3. The Indian security incidents are real—the connection to ServiceNow is fabricated**

CERT-In did indeed report several cases in which AI agents exceeded their tasks during testing and accessed the production systems of Indian organizations. Among other things, confidential business and personal data were accessed.

However, the agents primarily exploited exposed credentials, publicly accessible configurations, outdated interfaces, and overly generous cloud permissions. There is no evidence that these involved ServiceNow customers, and CERT-In has, of course, not endorsed AI Passport as a solution.

It is true that the warning and the product launch coincided. Tenbagger itself drew a direct connection from this. The fire department and the fire were both mentioned in the newspaper on the same day—but that does not prove that this particular fire department extinguished this specific house.

AI Passport addresses part of the problem, particularly runtime permissions. However, traditional IT security measures are still needed to combat leaked passwords, poorly configured cloud roles, and forgotten APIs.

**4. EmployeeWorks and ToolSmith are described correctly—and are also still in their infancy**

The basic points are correct here as well. EmployeeWorks is designed to let employees create their own assistants and routines. ToolSmith is intended to support development teams in building the necessary tools and automations.

However, various new EmployeeWorks features are currently still in limited release. “Will be able to build tools faster in the future” is therefore the correct phrasing. “Has already revolutionized the day-to-day operations of companies” would be the typical sales pitch.

**5. AI monetization, on the other hand, is already substantial**

This is where the real strength of the ServiceNow thesis lies—and it doesn’t even require much speculation about the future.

In the second quarter of 2026, ServiceNow achieved:

- $3.877 billion in subscription revenue,
- 24.5 percent reported growth, or 23 percent on a currency-adjusted basis,
- $13.2 billion in cRPO,
- more than $1 billion in AI-related annual contract value,
- and nine times as many productive agent-based AI implementations as nine months earlier.

The company is now targeting $1.5 billion in AI ACV for 2026.

These are solid operational indicators. However, ACV is not revenue that has already been recognized, and certainly not profit. Furthermore, the AI offering does not stem solely from organic development but is supplemented by acquired technologies such as Moveworks, Veza, and Armis.

**6. The “Focus on Organic Growth” Gets Unintentionally Funny**

ServiceNow has in fact explicitly denied any interest in Decagon. Management also describes itself as an “organic growth company first.”

However, one shouldn’t conclude from this that ServiceNow is currently relying primarily on organic growth. In the first half of 2026, approximately $8.8 billion was spent on acquisitions. At the same time, reported debt rose from about $2.4 billion to $8.5 billion, according to the attached report. Among other things, the company issued new bonds and commercial paper.

The Armis acquisition alone was originally announced at approximately $7.75 billion in cash.

So “We are not buying Decagon” is correct. To interpret this as “ServiceNow is focusing on organic growth” is roughly equivalent to someone who owns three cars claiming they’re not a consumer because they didn’t buy a fourth.

**7. The margin figures mix GAAP and non-GAAP**

The operating margins of over 31 percent mentioned in the article are not standard reported EBIT margins, but adjusted non-GAAP figures.

In the second quarter of 2026:

- the GAAP operating margin was only 4 percent,
- while the non-GAAP operating margin was 29.5 percent.

This massive difference stems primarily from stock-based compensation, amortization of acquired intangible assets, and other adjustments.

For the first six months of 2026, ServiceNow reported $1.199 billion in stock-based compensation against a GAAP net income of just $767 million. Stock-based compensation was thus significantly higher than the reported profit.

Non-GAAP metrics make sense for software companies, but they must be labeled correctly. Simply writing “EBIT margin 31.25 percent” does not turn an adjustment into a reality under commercial law.

**8. Even the strong operating cash flow needs an asterisk**

ServiceNow undoubtedly generates a great deal of cash. However, operating cash flow includes:

- high stock-based compensation,
- effects from prepayments and deferred revenue,
- as well as changes in working capital.

In the first six months of 2026, operating cash flow fell from $2.393 billion to $2.257 billion despite a sharp rise in revenue. At the same time, stock-based compensation totaled $1.199 billion.

So the cash flow is real, but it comes at a cost to shareholders. A portion of employee compensation is paid not through cash outflows, but through shares—and thus potential dilution.

**9. The “fair value” of $214 is a correct rule-of-thumbs calculation—but not a robust company valuation**

The math adds up:

$5.13 in operating cash flow per share × historical P/CV of 41.80 = approximately $214.

However, this calculation does not explain why ServiceNow should be valued at the 10-year average of 41.8 again in the future.

Those ten years included:

- at times, significantly higher growth rates,
- extremely low interest rates,
- a general explosion in SaaS valuations,
- and, at times, multiples that one wouldn’t necessarily describe as particularly reasonable.

According to Aktienfinder, the current P/E ratio is 29.24. The alleged fair value of $214 therefore simply assumes that the market will raise this multiple by about 43 percent again.

That’s not an intrinsic valuation. It’s multiple reversion dressed up in a suit and tie.

At a price of around $142, the expected P/E ratio is roughly in the low to mid-30s, and the EV/free cash flow ratio is approximately 32. ServiceNow is thus significantly cheaper than at its valuation peak, but it’s still not a bargain bin deal from the software clearance rack.

**10. Analyst targets are accurate—but they’re not an additional fundamental metric**

Mizuho did indeed raise its target to $170, TD Cowen to $165, and Oppenheimer also to $165.

At the same time, the attached Investing report shows only three positive EPS revisions compared to 35 negative ones over the past 90 days, along with a massive price target range of $72 to $248.

Given this range, the average price target is less of a precise roadmap and more of a rough weather forecast.

**11. The chart looks better in the short term, but hasn’t yet fully recovered in the long term**

Following the closing price of around $142, the daily chart continues to show a recovery:

- Price above the EMA50 and EMA200,
- RSI roughly neutral to slightly positive,
- MACD still positive.

On the weekly chart, however, the stock remains within or below an important resistance zone. Relevant levels are:

- Support initially around $138,
- then $130 to $127,
- resistance around $146,
- followed by approximately $154 to $156,
- above that, the path toward $165 to $170 would be technically much more favorable.

The stock price is thus no longer in free fall, but it has not yet convincingly returned to a long-term uptrend. The decline on October 16 was also part of a broader sell-off in software and technology stocks; ServiceNow gave back the gains it had made the previous day.

**My Neutral Assessment of ServiceNow**

In my view, ServiceNow is one of the most interesting large enterprise software companies in terms of quality. The combination of recurring revenue, high switching costs, deeply integrated workflows, CMDB, governance, and already measurable AI monetization is compelling. AI Passport is a very good strategic fit for the platform, but at present it is more of a credible product component than a proven new moat.

On the risk side are the still-high valuation, high stock-based compensation, significantly increased debt due to acquisitions, integration risks, and competition from Microsoft, Salesforce, Oracle, Workday, and emerging AI providers. In addition, increasing AI usage will initially drive up cloud and computing costs, which could weigh on the gross margin.

My verdict would therefore be:

**A very good company with a credible AI opportunity, but no proven 30-percent undervaluation. At around $142, ServiceNow is more reasonably valued than before, but it remains dependent on strong growth and the successful integration of acquisitions.**

The next quarterly results on October 28 are far more important than three recently raised analyst targets. Key factors will include organic subscription growth, cRPO, the development of AI-ACV, GAAP and non-GAAP margins, operating cash flow, and the costs of the acquired companies.

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Kai@Kai16081989

Top companies—I'm also confident that we'll see new highs in the coming years.

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capital_captain_2693@capital_captain_2693

Thanks for the introduction—great company 👍. I've been with them for a long time, and it's really fun. Why did the stock take such a hit today? -5%—that pretty much wipes out yesterday's nice gain.

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Dirty30@Dirty30

Easy hold

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Mario@TotheMoon123456789

Awesome post! Thanks for that!

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Tenbagger-Capital@Tenbagger-Capital

@TotheMoon123456789 Thanks for the compliment

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