TRADING CHEAT SHEET

• NOW – ServiceNow
• Forward P/E: ~25x  |  12-month avg trailing P/E: ~93x
• Q1 FY2026 Total Revenue: $3.77B (+22% YoY)
• Q1 Subscription Revenue: $3.67B (+22% YoY)
• Q1 Non-GAAP Operating Margin: 32%
• Q1 Free Cash Flow: $1.67B (44% margin)
• RPO: $27.7B (+25% YoY)  |  AI revenue target: $1.5B for 2026
• Key risk: Armis acquisition integration, near-term margin pressure

• INTU – Intuit
• Trailing P/E: ~23x  |  10-yr avg P/E: ~48x
• Forward P/E: ~14x (GuruFocus, May 2026)
• Q3 FY2026 Revenue: $8.56B (+10% YoY)
• Q3 Non-GAAP EPS: $12.80 (+10% YoY)
• 9-Month Revenue: $17.09B (+14% YoY)
• Stock down ~38% YTD 2026  |  Anthropic AI agent partnership (March 2026)
• Key risk: AI disruption to TurboTax, slower consumer tax unit volume

The market has a way of punishing software stocks on fear before the financials give it a reason to. That is where we are right now with a handful of names. Not every one of them deserves to be in the discount bin, and two in particular stand out as businesses where the actual reported numbers and the current stock price are not telling the same story.

Both have been growing revenue at double-digit rates. Both are generating substantial free cash flow. Both have real AI products either already generating revenue or beginning to deploy at scale. The valuations do not reflect any of that.

ServiceNow (NOW) is one of the more interesting disconnects in enterprise software right now. The company just reported Q1 fiscal 2026 total revenues of $3.77 billion, up 22% year over year. Subscription revenue hit $3.67 billion, also up 22%. Non-GAAP operating margin came in at 32%, 50 basis points above guidance. Free cash flow reached $1.67 billion at a 44% margin. The remaining performance obligation – contracted future revenue already on the books – ended the quarter at $27.7 billion, growing 25% year over year. Management raised full-year subscription revenue guidance to $15.74 to $15.78 billion, representing 20.5% to 21% growth.

That is not a company in trouble. And yet NOW’s trailing P/E has collapsed from a 12-month average near 93x down to roughly 61x trailing, with the forward multiple sitting around 25x. The stock has dropped over 51% in the past 52 weeks. The business did not drop 51%.

What matters is the AI revenue line. ServiceNow is targeting $1.5 billion in AI-specific commitments for 2026. Now Assist and related AI products saw deal volume grow 80% year over year in Q1 alone, with 5 deals exceeding $1 million in new net annual contract value. The company serves over 85% of the Fortune 500. Those are not customers you lose easily or quickly. Slight tangent, but it matters: ServiceNow has posted a 98% industry renewal rate for seven consecutive years. That kind of retention does not come from a weak product.

The risk is real and worth tracking. The Armis acquisition introduces near-term margin pressure that management acknowledged will weigh on free cash flow margin through 2026, with normalization expected in 2027. That is a legitimate concern for traders with shorter time horizons. For those focused on the business fundamentals over a longer window, the current entry point is historically unusual.

Intuit (INTU) is the messier story. The stock is down roughly 38% year to date in 2026, falling from above $813 to around $384. The reason the market gives: AI tools like ChatGPT could eventually disrupt TurboTax by making tax filing simple enough that consumers do it themselves without software. That fear is not irrational. It is also probably overstated at this point in time.

Here is where I am at on Intuit. The company just reported Q3 fiscal 2026 revenue of $8.56 billion, up 10% year over year. Non-GAAP EPS came in at $12.80, up 10% year over year. For the first nine months of fiscal 2026, total revenue was $17.09 billion, up 14% year over year. The Global Business Solutions segment – QuickBooks, Mailchimp, Intuit Enterprise Suite – grew 15% in Q3 alone. Operating income for the nine-month period increased 18% year over year. These are not the numbers of a business being disrupted in real time.

The valuation compression is significant. Intuit’s current trailing P/E sits around 23x. The 10-year historical average is closer to 48x. The forward P/E based on current estimates is approximately 14x – which is actually below the software industry median. GuruFocus currently rates Intuit as significantly undervalued with a GF Value estimate well above the current price. For a company with five durable consumer and business platforms and a 19.7% five-year revenue CAGR, a 14x forward multiple is worth a second look.

The innovation angle is real too. In March 2026, Intuit announced a multi-year partnership with Anthropic to deploy custom AI agents across QuickBooks, TurboTax, and its enterprise platform. The partnership uses Anthropic’s Claude to automate financial workflows for mid-market businesses – not as a bolt-on feature, but embedded within Intuit’s compliance and security infrastructure. The company is also deploying Claude Code internally across its engineering organization. Intuit is not ignoring AI. It is building with it, at scale, on top of decades of proprietary tax and financial data that no startup can replicate quickly.

The honest bear case on INTU is that TurboTax unit volume is under pressure. Fewer federal tax units in Q3 is not nothing. If AI genuinely accelerates the shift away from software-assisted filing over the next few years, the consumer segment faces real structural headwinds. That question is not resolved yet.

What is interesting is how rarely both conditions exist at once: a proven, multi-cycle operating history and a valuation that implies near-zero confidence in the business continuing to function. That is where both NOW and INTU sit right now. The market has priced in a disruption story that the actual reported earnings are not yet confirming.

That kind of gap usually closes. The question is always which direction.

Take a closer look at both before next earnings.

– Options Trading Report