Leading global software companies are undergoing one of the most brutal re-ratings in recent years as investors fret about the possibility of autonomous AI agents disrupting their traditional high-margin subscription model.
It doesn’t help when the newly minted Fed chair, Kevin Warsh, has taken a hawkish stance on interest rates, having held rates steady between 3.5% and 3.75% in June.
These headwinds are setting a massive disconnect between the prevailing market narrative and the actual operational realities of some of these high-growth software companies.
We check out their fundamentals that Wall Street is ignoring – and you shouldn’t.
ServiceNow (NYSE: NOW) – The Software Compounder
ServiceNow has plunged roughly 50% from its 52-week high of US$210 per share to US$105, a decline which is hard to ignore for investors.
However, what is harder to ignore are its hyper-growth engines.
In the first quarter of 2026 (1Q2026), ServiceNow’s subscription revenue grew 22% year on year (YoY) to US$3.67 billion, driving non-GAAP free cash flow (FCF) up 12.7% to US$1.67 billion.
The company has established itself among customers as a trusty “AI control tower for business reinvention” capable of integrating with any model, cloud, interface, data, and system they choose to deploy.
Crucially, ServiceNow’s customers are sticking around, evidenced by its staggering 97% renewal rate in 1Q2026.
ServiceNow’s “Now Assist” AI products are enjoying explosive demand, with high-value customers spending over US$1 million in annual contract value (ACV) growing more than 130% YoY during the quarter.
Far from being disrupted by autonomous AI, ServiceNow is leveraging AI to grow its business at a pace far exceeding management’s own expectations.
Microsoft (NASDAQ: MSFT) – The Digital Infrastructure Enabler
Microsoft investors were spooked by CFO Amy Hood’s recent announcement of a massive US$190 billion capital expenditure forecast for 2026, mostly to fund the development of large-scale data centres in the company’s race for AI dominance.
Investors who dumped Microsoft’s shares are overlooking the company’s role as a key digital infrastructure enabler for the agentic computing era.
In the three months ended 31 March 2026 (3QFY2026), Microsoft’s revenue grew 18.3% YoY to US$82.9 billion, driven by Azure’s growth of 40% YoY. Meanwhile, GAAP diluted earnings per share (EPS) grew 23% to US$4.27.
Although Azure’s cloud services are doing the heavy lifting of its top-line growth, Microsoft’s ambition is to be a multi-layered stack optimised for “agentic-computing”, making it one of the key foundational architects of the global AI infrastructure and not just a cloud service provider.
This lofty ambition is already gaining traction, with its annualised AI business run rate increasing 123% YoY to US$37 billion.
Microsoft is trading at just 19.8x forward earnings, a far cry from its five-year average of 32.1x.
This significant margin of safety could be a great opportunity for patient investors.
Palantir (NASDAQ: PLTR) – The Emerging Enterprise and Government AI Contractor
Palantir reported earnings that boasted a Rule of 40 score of 145%, an entirely different level across the software industry, only to be punished with its stock down by approximately 35% from its 52-week high.
It doesn’t help that the enterprise software powerhouse’s rapid growth aligns with the perception of a high-growth company susceptible to a hawkish, higher-for-longer interest rate policy.
Despite the negative sentiment, Palantir’s numbers say otherwise.
In 1Q2026, its revenue surged 85% YoY to US$1.63 billion, while net income skyrocketed 303% to US$876.4 million, driven by the rapid adoption of its Artificial Intelligence Platform (AIP).
AIP is Palantir’s integrated enterprise AI platform, designed to help organisations build, govern, and execute agentic workflows. It was instrumental in Palantir’s 133% YoY revenue growth in its US Commercial segment to US$595 million.
Such growth figures reflect a robust momentum that has gone far beyond experimentation into full production.
Moreover, the company carries zero debt.
Palantir has cemented its role as a trustworthy enterprise and government AI contractor. Instead of merely pitching “dazzling demos” with no notable outcomes, it deploys AI solutions capable of understanding the enterprise context to deliver real-world operational value at scale.
Get Smart: Ignore the Price, Not the Operational Realities
Despite the massive re-rating of the three names mentioned above, Wall Street seems to have ignored the operational realities that truly matter for long-term investors.
ServiceNow’s dominance in workflow orchestration is undisputed, as witnessed by its near-perfect renewal rate of 97%.
Already one of the key cloud service providers, Microsoft’s short-term capital expenditure to build a multi-layered infrastructure is necessary to elevate itself to a key AI infrastructure enabler.
A new era of production-grade agentic workflow is emerging in both the enterprise and government sectors, and Palantir is on top of it.
Prices reflect transitory market sentiments, but operational realities reflect the fundamentals, which prices usually follow eventually.
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Disclosure: Larry L. owns shares of Microsoft, ServiceNow, and Palantir.
