How I Made $5000 in the Stock Market

ServiceNow Stock and 4 More AI Losers to Consider Buying Now

Sep 26, 2025 10:12:00 -0400 by Paul R. La Monica | #AI #The Trader

ServiceNow, a cloud software platform whose shares have fallen more than 10% this year, could benefit as more of its customers adopt AI. (David Paul Morris/Bloomberg)

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Artificial intelligence may be responsible for massive gains in the stock market, but it is also responsible for some big losses. It may be time to start making some contrarian bets in software, services, and other areas of the market.

Despite the recent pullback in Big Tech stocks, there’s nothing artificial about the stock gains that chip giants Nvidia and Broadcom, and hyperscalers Microsoft , Alphabet , Meta Platforms , and Oracle , have generated this year due to their strong earnings and hope and hype about AI. These six stocks are up an average of nearly 40% so far in 2025.

But for all of the focus on the expected AI winners, there are also growing concerns that this disruptive technology is going to hurt other companies, particularly software firms, whose business can be replicated with AI tools. Look no further than Adobe, which has dropped 20% this year, even though net income in the first nine months of this fiscal year has increased by 36%.

“The narrative out there is that software is going to be run over by AI,” says Jonathan Curtis, chief investment officer at Franklin Equity Group. “But software stocks are underpriced and misunderstood.”

With that in mind, Curtis argues that ServiceNow , a cloud software platform whose shares have fallen more than 10% this year, should do just fine as more of its customers adopt AI. He thinks that will also be the case for Salesforce, which Barron’s wrote about in this column in August and is down about 1% since then.

Sage Group, a U.K.-based accounting and payroll software company that competes with Intuit, looks particularly attractive. The stock is down 15% on the London Stock Exchange while its U.S.-based shares have fallen about 8.5%. Sage now trades for just 23 times earnings estimates for 2026, a discount to both Intuit and its own five-year average.

On the services side, the worry is that AI could hurt companies heavily dependent on data—given that ChatGPT and other generative AI options are cheaper. Just look at FactSet Research Systems, a leading provider of information to financial firms. The stock has plummeted more than 40% this year and now trades for only 16 times earnings estimates, a 15-year low.

UBS analyst Alex Kramm argues that the AI fears dragging down FactSet are overdone and recently raised his rating on the stock to a Buy. He writes that investors may be wrong to assume that financial services companies will adopt AI quickly, noting that many banks “move slowly given complexities and regulatory demands” and that FactSet “is deeply integrated in customers’ workflows and remains in a strong position to be a trusted partner as clients navigate generational changes.” (Barron’s uses FactSet for market data.)

Other services companies—even low-tech ones—have the potential to get an AI boost. Facilities management firm ABM Industries is a good example. President and CEO Scott Salmirs said on ABM’s earnings call earlier in September that the company may use AI and robotics for some tasks but that “AI will not disintermediate” the company’s “fundamentally people-led” core businesses of maintenance and engineering.

Investors may also be underappreciating ABM’s ability to use AI to cut costs and generate new leads and revenue. ABM, a small-cap stock with a market value of just under $3 billion, trades for only 12 times 2025 earnings estimates. But if AI winds up boosting efficiencies and profit margins as much as bulls hope it will, that could eventually lift its multiple.

While the market’s Goliaths are the clear AI winners now, underdog stocks may eventually get a bigger boost from the AI revolution.

Write to Paul R. La Monica at paul.lamonica@barrons.com