David Hay — Portfolio Update: The "AI Casualties" That Just Teamed Up
The two names the market treated as AI roadkill — ServiceNow (the enterprise-software "victim") and Accenture (the IT-services "victim") — launched a joint agentic-AI security offering on June 26, which Haymaker reads as a "blatant rejection of the bear case on both names at once." NOW stays Buy/Accumulate; ACN moves from conditional starter to Hold/Accumulate. Plus a Petrobras quick-hitter: modest buy/buyback after the March trim.
One-line take: A three-name portfolio update built around a pair thesis. Both ServiceNow (NOW) and Accenture (ACN) — held Haymaker names beaten down for a year as "AI casualties" (NOW ~51% off its 52-wk high, ACN spent much of the year down >40%) — launched a joint offering on June 26: Accenture's managed security services built on the ServiceNow AI Platform, plus an AI migration tool to move enterprises off legacy risk/security platforms onto agentic AI. The division of labor (NOW = the platform agents run on; ACN = the partner that deploys them) is "precisely the split our bull case was built on," so Haymaker calls the deal a public rejection of the roadkill narrative — the two are infrastructure for AI disruption, not victims of it. NOW (~$105, down ~32% YTD, ~51% off its $211 high): fundamentals never fit the doom story — subscription revenue compounding ~19.5-20%, ~32% operating margin, FCF $4.6B (+34%), path to $30B revenue by 2030; a thickening system-integrator ecosystem (IBM, Cognizant, Google Cloud-HCLTech, Accenture) is turning it into the agentic-AI "control tower." Consensus Strong Buy (43 buys / 1 sell, ~$141 avg target, ~40% above). Stance: still Buy / Accumulate. ACN (~$138): the June-18 "prove-it" Q3 came in solid on the beneficiary drivers (op margin +20bps to 17.0%, EPS +9% to $3.80, FY FCF guided $10.8-11.5B, ~13% FCF yield at ~12-13× forward) though growth is still low-single-digit and bookings slightly soft; AI-partnership evidence is strong (OpenAI's first "AI Transformation Partner of the Year," Anthropic's most-certified partner globally, AI-platform bookings to more than double in FY26). Stance moves from "conditional starter" to Hold / Accumulate — accumulate patiently until organic growth stabilizes. PBR (Petrobras, ~$16.45): recommended ~$12.70 in June 2025, +75% to >$20 by March (trimmed), now ~25% off peak on cooled Brent + a negative technical picture, but Q1 2026 EPS beat on record Búzios/Tupi output and it carries a ~10% forward yield (analyst target ~$23). Not yet a table-pounding buy, but for a snap-back in grossly oversold oil, worthy of a modest buy… or buyback for those who trimmed. Portfolio: NOW & ACN are held Haymaker positions ("we hold both"); PBR remains a holding.
1. Stocks & names mentioned
| Ticker | Name | Research | View | What he said | At |
|---|
| NOW | ServiceNow | QT · SA · STK · FA | Positive | Still rated Buy / Accumulate. The contrarian-value case (a supposed "SaaSpocalypse" AI victim) is being validated: ~$105, down ~32% YTD and ~51% off the $211 high, yet subscription revenue compounds ~19.5-20%, operating margin ~32%, FCF $4.6B (+34%), with a reaffirmed path to $30B revenue by 2030. CEO Bill McDermott positions it as the "semantic layer" for enterprise AI; a thickening integrator ecosystem (IBM, Cognizant, Google Cloud-HCLTech, and the new Accenture deal) is standardizing on NOW as the governed place agents act — the agentic-AI "control tower," not a seat-based casualty. Consensus Strong Buy (43 buys / 1 sell), ~$141 avg target (~40% upside), Benchmark to $130. Risks: the seat-to-consumption pricing transition must keep net revenue retention from rolling over, and federal-pipeline exposure if government IT tightens. | read |
| ACN | Accenture | QT · SA · STK · FA | Positive | Stance moves from "conditional starter" to Hold / Accumulate. The June-18 "prove-it" Q3 tilted the casualty-vs-beneficiary debate toward beneficiary: revenue $18.7B (+6% USD / +3% local), new bookings $19.3B (modestly below the prior $19.7B), operating margin +20bps to 17.0%, diluted EPS +9% to $3.80, raised FY adjusted EPS to $13.78-13.90 with FCF guided $10.8-11.5B. AI-partnership evidence is genuinely strong: named OpenAI's first-ever "AI Transformation Partner of the Year," now Anthropic's most-certified partner globally, AI-platform bookings targeted to more than double in FY26; ~$9B of acquisitions this fiscal year (up from $5B). ~$138, ~12-13× forward earnings vs a historical low-20s multiple, a ~13% FCF yield. What keeps it accumulate-not-conviction-buy: low-single-digit organic growth and slightly soft bookings — wants growth to stabilize and AI bookings to actually accelerate the total growth rate before getting aggressive. | read |
| PBR | Petrobras (ADR) | QT · SA · STK · FA | Positive | Quick-hitter. Originally recommended June 2025 ~$12.70; ran +75% to over $20 by March when Haymaker suggested taking profits; since slid to ~$16.45 (~25% off peak) as Brent volatility cooled the trade and the technical picture flipped decisively negative. Fundamentally still executing — Q1 2026 EPS beat handily on record Búzios and Tupi production (even as revenue softened with oil prices) — with a ~10% forward yield and analysts targeting ~$23. Ideally wants a cheaper entry before making it a table-pounding buy as it was in December, but for a play on a muscular snap-back in grossly oversold oil prices it's worthy of a modest buy… or buyback for those who rang the register on the earlier trim. | read |
"View" is Haymaker's stance in this post (Positive / Neutral / Negative), not a price rating: NOW is Buy/Accumulate, ACN is Hold/Accumulate (up from conditional starter), PBR a modest buy/buyback. Referenced only: the June-26 NOW+ACN joint agentic-AI security offering, and the partner ecosystem (IBM, Cognizant, Google Cloud, HCLTech, OpenAI, Anthropic) named in the talking points, feed the master AI-victims-vs-winners macro theme rather than as tickers. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.
2. Talking points
The pair thesis — the two "AI casualties" just teamed up
- For the past year the market treated ServiceNow and Accenture as AI roadkill: the belief that agentic AI guts enterprise software (NOW) and the labor-arbitrage model of IT services / consulting (ACN). NOW is ~51% off its 52-week high; ACN spent much of the year down over 40% before a bounce into its June quarter.
- On June 26 the two launched a joint offering, and "the shape of that deal is, in our view, a blatant rejection of the bear case on both names at once."
What the joint offering actually is
- It pairs Accenture's managed security services — built on the ServiceNow AI Platform — with an AI-based migration tool to move large enterprises off legacy risk and security platforms onto agentic AI.
- The division of labor: ServiceNow supplies the platform (the system of record where agents execute governed security and risk workflows); Accenture supplies the deployment muscle (integration + managed services). "That is precisely the split our bull case was originally built on" — NOW is the platform AI runs on; ACN is the partner enterprises hire to deploy AI.
ServiceNow — the contrarian thesis is taking hold
- NOW trades ~$105, down ~32% YTD and ~51% from its $211 high, but the fundamentals never fit the doom story: subscription revenue still compounding ~19.5-20%, operating margin ~32%, free cash flow $4.6B (up 34%), management reaffirming a path toward $30B revenue by 2030.
- CEO Bill McDermott positions ServiceNow as the "semantic layer" that makes AI usable across the enterprise. "These are not the numbers or the actions of a business being wiped from existence."
ServiceNow — the integrator ecosystem is the tell
- Increasing evidence the platform is becoming the agentic-AI control tower rather than a seat-based casualty: the Accenture deal is one of several — NOW expanded its IBM collaboration in June, integrated Cognizant's AI trust layer, deepened the Google Cloud-HCLTech alliance, and keeps adding system integrators to its partner program.
- "Agents need a governed place to act inside the enterprise, and the integrators are standardizing on ServiceNow as that place." The Street is coming around: consensus Strong Buy, 43 buys to one sell, ~$141 average target (~40% above), Benchmark recently to $130.
ServiceNow — the call: still Buy / Accumulate
- "The contrarian thesis is still mostly in place, the discount is close to the same as when we first flagged it, and the agentic-platform validation is arriving on a near-weekly cadence."
- Risks that still apply: the seat-to-consumption pricing transition must keep net revenue retention from rolling over, and there's real federal-pipeline exposure if government IT spending tightens. But 20% subscription growth, 32% margins, a thickening ecosystem and a sentiment inflection off the lows say "NOW is a survivor being repriced as a casualty. That is the asymmetry we bought."
Accenture — the "prove it" quarter suggests AI is a tailwind
- ACN was framed as a conditional buy heading into its June-18 Q3, with the AI debate unresolved and growth deceleration the thing to watch. The quarter was solid on the beneficiary drivers, even if softer on growth: revenue $18.7B (+6% USD / +3% local), new bookings $19.3B (modestly below the prior year's $19.7B), operating margin +20bps to 17.0%, diluted EPS +9% to $3.80, FY adjusted-EPS range raised to $13.78-13.90, FCF guided $10.8-11.5B.
- Honest read: "profitability, earnings, and cash-generation are fine-to-good," but the top line is still stuck in low single digits and slipping bookings remain the soft spot — the growth reacceleration the bulls want did not arrive.
Accenture — the AI-partnership evidence is strong and improving
- Partnership-driven revenue continues to outpace overall growth: named OpenAI's first-ever "AI Transformation Partner of the Year," now Anthropic's most-certified partner globally, AI-platform bookings targeted to more than double in fiscal 2026. The ServiceNow joint offering is "another brick in that wall" — proof enterprises pay Accenture to deploy agentic AI on leading platforms rather than bypassing it.
- Management is investing behind the thesis: ~$9B in acquisitions this fiscal year (up from $5B) to build AI, cybersecurity and data capabilities.
Accenture — valuation and the call: Hold / Accumulate
- ~$138, recovered from its lows but still ~12-13× forward earnings — a steep discount to its historical low-20s multiple and to the market — for a business compounding EPS at high-single to low-double digits with $11B of free cash flow, "a 13% FCF yield!"
- Stance moves from "conditional starter" to Hold / Accumulate: the "prove it" quarter tilted the debate toward beneficiary (AI showing up as a bookings tailwind and a deployment franchise, not disintermediation), and profitability is durable. What keeps it accumulate-mode rather than a conviction buy is the same low-single-digit organic growth and slightly soft bookings — wants growth to stabilize and AI-partnership bookings to accelerate the total growth rate upward before getting more aggressive.
The bottom line — hold them as a pair
- "The most useful way to hold these two is as a pair, because the thesis is now shared and mutually reinforcing." Both were sold as victims of AI disruption yet both are demonstrating they are infrastructure for it — NOW the platform agents run on, ACN the partner that helps deploy them. Each is cheap relative to its own history, each generates substantial free cash, "repriced by a market that conflated 'AI changes this industry' with 'AI ends this company.'"
- ACN is the steadier, lower-beta beneficiary but with the growth question still open, so accumulate it more patiently. Owning both = "the platform and the deployment partner for enterprise agentic AI, at a pretty big discount… the toll booth and the on-ramp rather than the roadkill."
Quick-hitter — Petrobras (PBR)
- Originally recommended June 2025 ~$12.70; ran +75% to over $20 by March, when Haymaker suggested taking some profits; since slid to ~$16.45 (~25% off peak) as Brent volatility cooled the trade and the technical picture flipped decisively negative.
- Fundamentally still executing — Q1 2026 EPS beat handily on record Búzios and Tupi production (even as revenue softened with oil prices) — with a ~10% forward yield and analysts targeting ~$23. Ideally wants a cheaper entry before making it a table-pounding buy as in December; but for a play on a muscular snap-back in grossly oversold oil, "it's worthy of a modest buy… or buyback for those who rang the cash register when we suggested trimming a few months ago."
3. In plain English
A jargon-free summary of the thesis behind each name — what it is and why he holds that view. (Plain-language companion to the table above; renders on each ticker's consolidated page.)
NOW — ServiceNow Positive (Buy / Accumulate)
ServiceNow sells the software big companies use to run their internal workflows — IT tickets, HR requests, security and risk processes. For a year investors feared that AI "agents" (software that does tasks on its own) would make this kind of seat-by-seat software obsolete, so the stock fell ~51% from its high to about $105. Haymaker owns it and argues that fear was wrong.
The business itself never looked like it was dying: sales are still growing ~20% a year, it keeps about a third of every dollar as operating profit, and it generated $4.6 billion of spare cash (up 34%). More importantly, AI agents need a trusted, governed place inside a company to actually do their work — and the big consulting/integration firms (IBM, Cognizant, Google, and now Accenture) are all standardizing on ServiceNow as that place. So instead of being killed by AI, it's becoming the "control tower" agents run through. Wall Street analysts are now overwhelmingly bullish (43 buys, 1 sell, price target ~40% higher). Haymaker keeps it a Buy / Accumulate: the stock is nearly as cheap as when first recommended, but the evidence it's a survivor keeps arriving. Watch two risks — a shift from charging per-user to charging per-usage (which could dent renewal revenue) and its exposure to US government IT budgets.
ACN — Accenture Positive (Hold / Accumulate — up from conditional starter)
Accenture is the world's largest consulting and IT-services firm — the people companies hire to actually build and install new technology. The bear case was that AI would gut its business model (why pay armies of consultants if AI does the work?). Haymaker had it as a "conditional starter" — buy a little, wait for the June quarter to prove the case either way.
The June quarter was the "prove it" test, and it leaned positive. Profits, margins and cash flow were all fine-to-good (earnings up 9%, a raised full-year forecast, and roughly $11 billion of free cash — a fat ~13% cash-flow yield at ~12-13× earnings, cheap versus its own history). And the AI evidence is genuinely strong: Accenture was named OpenAI's first "AI Transformation Partner of the Year," is Anthropic's most-certified partner in the world, and its AI-platform orders are set to more than double this year — meaning enterprises are paying Accenture to deploy AI, not bypassing it. The one blemish is that overall revenue is still only growing in the low single digits, with new orders slightly soft. So Haymaker upgrades its stance from conditional starter to Hold / Accumulate — keep buying, but patiently, until the top-line growth actually speeds up.
PBR — Petrobras Positive (modest buy / buyback)
Petrobras is Brazil's giant state-controlled oil company. Haymaker recommended it a year ago around $12.70; it jumped 75% to over $20 by March, at which point they told readers to take some profit. It has since fallen back to about $16.45 — roughly 25% below its peak — because oil prices cooled and the stock's chart turned decisively weak.
The business is still doing well (record output from its Búzios and Tupi fields drove an earnings beat), and the shares pay a hefty ~10% dividend yield with analysts targeting ~$23. Haymaker would prefer to wait for an even cheaper price before pounding the table on it again. But as a bet that badly oversold oil prices snap back, it's worth a modest new purchase — or a re-buy for anyone who sold some earlier when they suggested trimming.
Summary derived from the paid Haymaker newsletter (text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.