AI Survey: The Pulse of AI Spend & Strategy - Slide Deck

Research evidence excerpt

AI Survey: The Pulse of AI Spend & Strategy - Slide Deck

SOFTWARE

July 14, 2026

Risks and Valuation

NOW: Valuation/Risks. Shares currently trade at about 6.6x EV/NTM Subs (on our plausible estimates) at the current stock price ($111.26). NOW

also trades at about 19.0x EV/NTM FCF (which increases to 21.1x if we include stock repurchases required to offset dilution). Our $125 PT is based

on a 3-stage DCF analysis and contemplates 7.5x EV/NTM Recurring Revenue (on our plausible estimates). Risks include 1) unexpected macro

trajectory could present downside risk versus our estimates, 2) significant decrease in federal spend could result in downside compared to our

estimates, and 3) lower revenue contribution from Gen AI solutions than we anticipate.

CRM: Valuation. We utilize a rigorous, academic approach to a 3-stage DCF to value a Software company. We also consider multiples, such as

EV/recurring revenue (since recurring revenue is where the FCF comes from). Our DCF-derived $228 PT contemplates 5.0x EV/NTM Recurring

Revenue. The stock trades at about 3.6x EV/NTM Subs (on our plausible estimates). CRM also trades at about 13.7x EV/NTM consensus FCF

(which increases to 19.7x if we include stock repurchases required to offset dilution). Risks Include: 1) Significant deterioration in the macro

backdrop, 2) Potential significant margin contraction, and 3) New ACV (organic cc) significantly underperforms.

MSFT: Valuation. We know of no better way to value a Software company than a rigorous, academic approach to a three-stage DCF analysis. We

also consider relative multiples to inform our valuation. MSFT's current price of $390.99 implies about 77.6x EV/NTM FCF and compares to around

26x for the average megacap software company. Risks.