Title:   Portfolio Update — The "AI Casualties" That Just Teamed Up (ServiceNow & Accenture)
Show:    Haymaker (Substack) — Portfolio Update, paid
Guest:   David Hay (Haymaker; co-founder/ex-CIO Evergreen Gavekal)
Date:    2026-JUL-06
URL:     https://haymaker.substack.com/p/portfolio-update-a2a
Length:  written post (no timestamps)
Note:    Portfolio Update on the NOW+ACN pair (June 26 joint agentic-AI security offering as rejection of the AI-roadkill bear case) plus a Petrobras quick-hitter. Body reproduced for personal study; boilerplate disclosures omitted.

ServiceNow & Accenture

ServiceNow (NYSE: NOW) & Accenture (NYSE: ACN) NOW ~$100 · ACN ~$180 · Figures verified as of June 30, 2026. Confirm live quotes and your entries before publishing.

As devoted Haymakers are aware, we hold both ServiceNow and Accenture. For the past year, the market has treated the two as AI roadkill. The belief is that agentic AI guts enterprise software (NOW) and the labor-arbitrage model of IT services / consulting (ACN). NOW is down roughly 51% from its 52-week high; ACN spent much of the year down over 40% before a bit of a bounce into its June quarter. So it matters that on June 26 the two launched a joint offering, because the shape of that deal is, in our view, a blatant rejection of the bear case on both names at once.

The offering 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 goes something like: ServiceNow supplies the platform (the system of record where agents execute governed security and risk workflows) and Accenture supplies the deployment muscle (the integration and managed services that actually get enterprises onto it). That is precisely the split our bull case was originally built on when we recommended these names. NOW is the platform AI runs on; ACN is the partner enterprises hire to deploy AI.

In short, the two supposed casualties just demonstrated — together, publicly — that they are AI beneficiaries: NOW extends its platform into high-value security and risk budgets, and ACN proves it monetizes AI as the deployment layer rather than being disintermediated by it.

ServiceNow (NOW): The Contrarian Thesis Is Taking Hold… Maybe

When we presented our original contrarian-value case on ServiceNow, Haymakers may have thought we were destined for the funny farm. At the time, the narrative was that the company was dead to rights and squarely in the crosshairs of being extinguished by AI. Today (or now, if you will), NOW trades around $105, as of this writing, down about 32% year to date and roughly 51% from its 52-week high of $211. Lately, software stocks have been gaining some steam, as the market seems to be waking up to the realization that AI's destruction to the sector may be far more discriminate than originally feared.

The SaaSpocalypse concerns we have written about (and refuted in the case of NOW) drove the de-rating, but the company's fundamentals never fit the doom story. Subscription revenue is still compounding at roughly 19.5-20%, operating margin runs around 32%, free cash flow hit $4.6 billion (up 34%), and management reaffirmed a path toward $30 billion in revenue by 2030. CEO Bill McDermott is positioning the company 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, and we think the company's next earnings report will further validate the company's essential role in integrating AI enterprise-wide.

To that point, there is increasing evidence that the platform is becoming the agentic-AI control tower rather than a seat-based casualty (the well-worn threat markets were assuming would unfold). The Accenture deal is one of several examples: 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. That ecosystem is the tell since agents need a governed place to act inside the enterprise, and the integrators are standardizing on ServiceNow as that place. The Street has started to come around to our thesis: consensus is a Strong Buy, 43 buys to one sell, with an average target around $141 (roughly 40% above the current price) and Benchmark recently lifting to $130.

At the current price, we are still recommending Buy / Accumulate NOW. 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. The risks we've talked about still apply and bear watching: the seat-to-consumption pricing transition must keep net revenue retention from rolling over, and there is real federal-pipeline exposure if government IT spending tightens. But the weight of evidence — 20% subscription growth, 32% margins, a thickening integrator ecosystem, and a sentiment inflection off the lows — says NOW is a survivor being repriced as a casualty. That is the asymmetry we bought, and it is finally starting to pay.

Accenture (ACN) — The "Prove It" Quarter Suggests AI Is A Tailwind

We had framed ACN as a conditional buy heading into its June 18 third-quarter print, with the AI debate unresolved and the growth deceleration the thing to watch. The quarter came in solid on the drivers that matter for the beneficiary case, even if still somewhat softer on growth.

Revenue was $18.7 billion, up 6% in dollars but only 3% in local currency. ACN's new bookings of $19.3 billion were modestly below the prior year's $19.7 billion, but operating margin expanded 20 basis points to 17.0%, diluted EPS rose 9% to $3.80, and management raised the full-year adjusted EPS range to $13.78-13.90 with free cash flow guided to $10.8-11.5 billion. We think the honest read is that profitability, earnings, and cash-generation are fine-to-good. But, to buy this stock you need to be aware that the top-line is still stuck in low single digits, while slipping bookings remain the soft spot. The growth reacceleration the bulls want did not arrive.

Still, the AI-partnership evidence (which is the heart of the "AI as a tailwind" thesis) is genuinely strong and improving. Accenture's partnership-driven revenue continues to outpace its overall growth, as it was named OpenAI's first-ever "AI Transformation Partner of the Year," and it is now Anthropic's most-certified partner globally, with AI-platform bookings targeted to more than double in fiscal 2026. The ServiceNow joint offering is another brick in that wall, providing concrete proof that enterprises are paying Accenture to deploy agentic AI on leading platforms, not bypassing it. And management is investing behind the thesis, deploying roughly $9 billion in acquisitions this fiscal year, up from $5 billion, to build AI, cybersecurity, and data capabilities.

ACN trades around $138, having recovered from its lows but still at roughly 12-13x forward earnings, a steep discount to its historical low-20s multiple and to the broader market, for a business compounding EPS at high-single to low-double digits with $11 billion of excess, or free, cash flow (FCF). Remarkably, the latter data point generates a 13% FCF yield!

Our stance moves from "conditional starter" to Hold / Accumulate. The "prove it" quarter tilted the AI casualty-versus-beneficiary debate toward beneficiary: AI is showing up as a bookings tailwind and a deployment franchise, not as the disintermediation the bears feared, and profitability is durable. What keeps us more in slowly accumulating mode rather than a conviction buy is the same thing it has been all along: low-single-digit organic growth and slightly soft bookings. We'd like to see growth stabilize and the AI-partnership bookings actually accelerate the company's total growth rate upward before getting more aggressive.

The Bottom Line

In our humble opinion, 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 the AI-disruption narrative, yet both are demonstrating they are actually infrastructure for that disruption instead. NOW looks poised to be the platform agents run on and ACN as the partner that helps deploy them. Each is cheap relative to its own history, each generates substantial free cash, and they are being repriced by a market that conflated "AI changes this industry" with "AI ends this company."

We remain optimistic on both names and think long-term they will be considerably higher than where they are today. ACN is the steadier, lower-beta beneficiary, but where the growth question is still open, so we advise accumulating it more patiently. We feel increasingly convinced that by owning ACN and NOW, you own the platform and the deployment partner for enterprise agentic AI, at a pretty big discount. Together, it looks more and more like they intend to be the toll booth and the on-ramp rather than the roadkill.

Quick-hitter on Petrobras (PBR):

For Haymakers keeping score at home, we originally recommended PBR back in June of 2025 at around $12.70. By March of this year, it had run up 75% to over $20 and we recommended taking some profits. Since then PBR has slid back to roughly $16.45, about 25% off its peak, as Brent volatility cooled the trade and the technical picture flipped decisively negative. Fundamentally the business is still executing (Q1 2026 EPS beat handily on record Búzios and Tupi production, even as revenue softened with oil prices) and the shares still carry a cushy ~10% forward yield with analysts targeting ~$23.

Ideally, we'd like a cheaper entry point before making this a table-pounding buy as it was in December. However, for a play on a muscular snap-back in grossly over-sold oil prices, it's worthy of a modest buy… or buyback for those who rang the cash register when we suggested trimming a few months ago.

The Haymaker Team