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The "SaaSpocalypse" narrative has gripped Wall Street, dragging the software and tech sector down roughly 22% this year. The fear driving this sell-off is singular, terrifying, and easy to understand: artificial intelligence (AI) agents will automate white-collar work so effectively that businesses will no longer need to buy software licenses for human employees.

If an AI can do the job of three analysts, why pay for three software seats? This logic has led investors to dump shares of companies ranging from Salesforce (NYSE: CRM) to Adobe (NASDAQ: ADBE), fearing their business models are evaporating.

But while the trading algorithms sell on fear, the insiders at ServiceNow (NYSE: NOW) are buying with conviction.

In a mid-February strategic move, ServiceNow CEO Bill McDermott executed a $3 million open-market purchase of his company’s stock. Even more significantly, key members of the executive team, including the CFO and Chief People Officer, simultaneously terminated their automated 10b5-1 trading plans.

While the market panics about an AI future without software, ServiceNow’s leadership is betting personal capital that the company is not the victim of AI, but its master.

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Why Insiders Just Killed the Autopilot

To understand the weight of this move, investors must look past the headline purchase and focus on the legal mechanics. Most corporate executives use something called a 10b5-1 plan to sell stock. These are automated schedules set up months in advance, for example, sell 1,000 shares on the first of every month.

Executives use these plans for valid personal reasons: they are paid largely in stock, and they need to sell shares to diversify their personal wealth or pay taxes. These plans exist to protect executives from accusations of insider trading by putting their sales on autopilot, regardless of whether the company’s stock price is high or low.

Terminating these plans early is incredibly rare. It is a legally complex maneuver that often triggers cooling-off periods, preventing executives from setting up new sales plans for months. By cancelling these plans today, ServiceNow’s C-Suite has effectively removed the autopilot selling pressure from the market. They are signaling that they view the stock, currently trading near $105, down roughly 55% from its highs, as so severely undervalued that they refuse to sell even a single share.

This is a corporate put option. It suggests that management’s internal data contradicts the external market panic. Analysts at firms like Evercore ISI have already flagged this as a deliberate vote of confidence. When an entire management team stops selling and starts buying during a market crash, it usually marks a psychological and financial floor for the stock.

The AI Control Tower Defense Strategy

The market’s fear is rooted in seat compression. Investors worry that AI agents will shrink corporate headcounts, leading to fewer software subscriptions. ServiceNow’s counterargument is distinct: they are no longer just selling tools for humans; they are selling the governance layer for AI agents.

As enterprises deploy billions of autonomous agents, corporate IT environments will become chaotic. These digital workers need to be secured, audited, and managed. They need to be told what data they can access and what actions they are allowed to take. ServiceNow calls this strategy the AI Control Tower.

This strategy explains the company’s aggressive and controversial spending spree on mergers and acquisitions (M&A).

• Armis ($7.75 billion): This massive acquisition secures the Operational Technology (OT) segment. This refers to physical assets, such as factory robots, HVAC systems, and medical devices, that AI agents will increasingly interact with.
• Moveworks ($2.85 billion): This deal provides the sophisticated conversational interface that acts as the front door for employees to command these agents.

 

Critics have argued these acquisitions dilute shareholder value and add integration risk. However, the insider buying suggests that leadership views these assets as essential infrastructure. They are betting that as the business world grows more chaotic and automated, a centralized, secure platform like ServiceNow will become increasingly valuable. They aren't buying a legacy software company; they are buying the regulatory infrastructure for the AI economy.

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The Double Down: Buybacks and Margins

There is a stark gap between ServiceNow’s stock chart, which appears to show a crisis, and its financial statements, which appear to show a boom. While the share price has collapsed, the business is accelerating.

In the fourth quarter, subscription revenue grew 21% year over year to $3.47 billion. Even more impressive was the company’s efficiency; Free Cash Flow (FCF) margins hit a massive 57%. This paints a picture of a Rule of 50 company. In software investing, the Rule of 40 (Growth Rate + Profit Margin) is the gold standard for a healthy company. ServiceNow is exceeding the Rule of 50, meaning it is generating cash faster than it can spend it, even as it grows rapidly.

The Board of Directors has acknowledged this disconnect between price and performance by authorizing a new $5 billion share repurchase program. But they didn't just authorize it; they triggered a $2 billion Accelerated Share Repurchase (ASR) immediately.

This is a critical distinction. An authorization is just a promise; an ASR is an immediate execution. The company is aggressively buying back its own stock at these discounted levels. This mechanically boosts earnings per share (EPS) because there are fewer shares in circulation to divide the profits among.

From a valuation perspective, the math is compelling. The stock is trading in the $100-$107 range, while the median analyst price target sits at $192.This implies a potential upside of nearly 80% if market sentiment normalizes. Investors are currently pricing ServiceNow as if its growth were about to evaporate, even though the company’s guidance calls for continued ~20% revenue growth in 2026.

The Binary Bet

Investors today face a binary choice. One path is to believe the SaaSpocalypse narrative: that AI will render enterprise software obsolete faster than these companies can adapt, turning industry giants into value traps. The other path relies on hard financial data: accelerating revenue, massive cash-flow margins, and aggressive buying by the people who know the business best.

Bill McDermott, the former CEO of SAP and now the leader of ServiceNow, has a history of making bold calls that pay off. Betting against him when he puts his own money on the table has historically been a losing trade. The simultaneous termination of executive sales plans and the $3 million insider purchase suggest that the bottom is likely in. For investors willing to look past the panic headlines, ServiceNow offers a rare opportunity to buy a market leader at a crisis discount. The insiders have placed their bets; now the market must decide if it will follow.

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