David Hay — Portfolio Update: ServiceNow / Alibaba (Haymaker, Jun 2026)

One-line take: Two portfolio holdings updated. ServiceNow (NOW) — the winner: bought ~$102 (Apr 2) as "one of the most ridiculously mispriced stocks," gapped to a ~$83 52-wk low pricing the worst case of three fears, now ~$135 (+~30% in two months). Q1 confirmed it (subscription rev $3.671B +22%, FCF $1.665B, RPO $27.7B +25%, +14.56% on the print), and Knowledge 2026 launched AI Control Tower — the governance/accountability layer for enterprise AI agents ("who is responsible when an agent does something wrong?"). Thesis playing out, but after a 65% rally off the bottom "some gain-harvesting may be in order" — though likely higher in six months if you can hold. Alibaba (BABA) — down ~25% from his "China's Amazon and Google rolled into one" call, in the "penalty box" on heavy AI/chip/food-delivery investment crushing the bottom line, but cheap on price/sales — gradually dollar-cost-average this "world-class company."

1. Stocks & names mentioned

2. Talking points

Ticker	Name	Research	View	What he said	At
NOW	ServiceNow	QT · SA · STK · FA	Positive	The winner: bought ~$102 (Apr 2) as "one of the most ridiculously mispriced stocks"; gapped to a ~$83 52-wk low at ~5.6x fwd revenue pricing the worst case, now ~$135 (+~30%). Q1: subscription rev $3.671B (+22%), FCF $1.665B (+13%), RPO $27.7B (+25%), +14.56% on the print. AI Control Tower launched at Knowledge 2026 as the enterprise-AI governance layer; Now Assist scaling. Thesis confirmed — but after a 65% rally "some gain-harvesting may be in order," though likely higher in 6 months if you hold.	read
BABA	Alibaba Group	QT · SA · STK · FA	Positive	Accumulate: down ~25% from his "China's Amazon and Google rolled into one" call; poor bottom line from heavy AI investment (>100% growth), food-delivery losses, and an internal chip division (cutting Western/Korean semi reliance). In the "penalty box" until the outlays show returns, but cheap on price/sales — gradually dollar-cost-average this "world-class company."	read

ServiceNow — the entry and the bounce

Bought NOW at $102 on April 2 as "one of the most ridiculously mispriced stocks." It then gapped to a 52-week low ~$83 on April 10, pricing the worst case of three concerns — AI disruption to the SaaS workflow model, Armis-acquisition margin headwinds, Middle-East deal delays — at ~5.6x forward NTM revenue.
Now ~$135, up ~30% in two months.

Q1 2026 (Apr 22) — the numbers confirmed the call

Subscription revenue $3.671B (+22%), FCF $1.665B (+13%), RPO $27.7B (+25%), outlook raised; stock +14.56% on earnings.
16 deals >$5M net-new ACV (+~80% YoY); Now Assist $1M+ ACV customers +130% YoY.

Knowledge 2026 — AI Control Tower & Otto

Launched AI Control Tower — the governance/accountability layer for enterprise AI agents ("who is responsible when an agent does something wrong?") — and Otto, a conversational AI interface.
Security/risk offerings crossed $1B ACV (Armis + Veza); AWS Marketplace sales topped $1B; Experian Ascend + Boomi partnerships announced.

ServiceNow — the model and the catalysts

$4.6B annual FCF, 98% renewal, $27.7B contracted revenue. Catalysts: 6.5x consumption conversion, Now Assist toward $2B+, autonomous-workforce deployments. Q2 earnings July 21.

ServiceNow — harvest some gains?

A ~30% return in two months on a thesis playing out — but after a 65% rally off the bottom, some gain-harvesting may be in order, though the stock is more likely higher in six months if you can hold.

Alibaba — the penalty box

Down ~25% from his bullish call ("China's Amazon and Google rolled into one"). Poor bottom line: heavy AI investment (growing >100%), food-delivery losses, and an internal chip division reducing reliance on Western/Korean semiconductors.
In the "penalty box" until it shows the capital outlays can generate returns. "Heaven forbid if the Big Four US hyperscalers were held to this standard!"

Alibaba — accumulate the "world-class" name

Trades cheaply, particularly on price/sales — the suggestion is gradual dollar-cost-averaging into this "world-class company" rather than a single entry.

3. In plain English

NOW — ServiceNow Positive

ServiceNow sells software that big companies use to run their internal workflows (IT tickets, HR requests, and now AI "agents" doing tasks). Hay bought it in early April at ~$102 calling it one of the most mispriced stocks around — and within days it fell to ~$83 as the market panicked over three worries (would AI make its software obsolete, would an acquisition hurt margins, would Middle-East deals slip). He thought all three fears were overdone, and the next earnings report proved him right: revenue, cash flow and the backlog of signed contracts all jumped, and the stock leapt 14.5% in a day. It's now ~$135, up ~30% from his buy.

The new product that matters is "AI Control Tower" — think of it as the cockpit that lets a company supervise all the AI agents working inside it and answer "who's accountable when an agent makes a mistake?" That's exactly the governance problem every large enterprise is about to face, which is why Hay sees more growth ahead. His one note of caution: the stock has run 65% off its low, so taking some money off the table is reasonable — even though he expects it higher still in six months if you can sit tight.

BABA — Alibaba Group Positive

Alibaba is the Chinese giant Hay describes as "Amazon and Google rolled into one." The stock is down ~25% since he recommended it because its profits look bad right now — but the reason is that it's pouring money into AI (spending growing over 100%), eating losses in food delivery, and building its own computer chips to stop depending on US and Korean suppliers. Those are investments in the future that depress today's earnings. Hay's wry point: if America's big tech companies were judged as harshly for their own AI spending, they'd be in the penalty box too.

So he's not declaring victory — Alibaba stays in the "penalty box" until the spending starts producing returns. But the stock is cheap measured against its sales, and it's a genuinely world-class business, so rather than buy all at once he suggests dollar-cost-averaging: buying a bit at a time on the way, which lowers the risk of being early on a name that's still out of favor.

Summary & excerpts derived from the paid Haymaker Substack post (saved text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.