u/Himothy8

The author's DCF shows the market pricing in 20% revenue growth for 5 years then 10% for 15 years, yielding a conservative fair value of $139, but the author believes ServiceNow will reaccelerate to low-to-mid 20s growth for the next decade, giving a fair value of $272. The mechanism is ServiceNow's shift to charging based on compute used, positioning it as the 'highway for AI agents' across its three core products (IT workflows 53%, consumer workflows 24%, creator workflows 23%), so as AI agents do more tasks, ServiceNow captures that growth. The main stated risk is that the author used a lower 28% operating margin (22.4% after tax) to account for stock-based compensation, acknowledging the market's more conservative assumptions.

The author argues Adobe is attractively valued at 15x forward non-GAAP earnings for a SaaS business with 89% gross margins, and doubts it can be disrupted because switching providers would require employers to bear high retraining costs. He notes Adobe products are taught in colleges (Acrobat, Premiere) and that 90% of licenses are provided by businesses, making them a small share of total corporate expenses and thus sticky. He admits he doesn't know when it will bottom but cannot imagine Adobe ever falling to 10x earnings.

Author argues AMD's growth will surprise investors because the Street doubts management's guidance. He expects sales of MI450 accelerators in the back half of 2026 to drive the stock to $300-$350, and holds a separate 5-10 year long-term position.