New York, January 29, 2026, 05:00 EST — Premarket
- ServiceNow shares were seen falling roughly 6% premarket following its quarterly report and a positive outlook
- The company boosted its buyback authorization by $5 billion and announced a $2 billion accelerated repurchase
- Traders juggle AI-fueled demand amid a rising wave of acquisitions
Shares of ServiceNow (NOW) dropped almost 6% in premarket trading Thursday following a disappointing quarterly report and weak 2026 outlook. The stock was last seen at $122.27, down from Wednesday’s close of $129.62. (Investing.com South Africa)
The early action is crucial since ServiceNow is viewed as a barometer for large enterprise software spending. Investors need concrete evidence that the new AI features will drive fresh business rather than just serve as marketing spin.
The timing is tense for big application software companies, grappling with whether generative AI will drive demand or erode prices. ServiceNow is doubling down on “agentic AI” — software that performs tasks within business systems — and investors are starting to see the impact in the data.
Late Wednesday, ServiceNow announced fourth-quarter subscription revenue of $3.466 billion, pushing total revenue to $3.568 billion. The company posted a non-GAAP profit of $0.92 per share. Its current remaining performance obligations—contracted revenue expected to be recognised in the next 12 months—jumped to $12.85 billion. Looking ahead to 2026, ServiceNow forecast subscription revenue between $15.53 billion and $15.57 billion. The board also approved an extra $5 billion for share repurchases, including an “imminent” $2 billion accelerated buyback, which retires shares rapidly through a bank. (ServiceNow Newsroom)
Wall Street is grappling with what’s really driving ServiceNow’s growth, especially how much stems from new purchases. The company’s forecast beat analysts’ consensus, which stood at $15.21 billion. It also revealed that its Moveworks acquisition will boost subscription revenue growth by roughly 100 basis points. ServiceNow has been busy on the M&A front, sealing a $7.75 billion deal for cybersecurity firm Armis—its largest yet. “ServiceNow is growing both organically and by acquisition,” said Rebecca Wettemann, CEO of Valoir, an industry analyst firm. (Reuters)
Some investors didn’t expect the stock to slide. “We are a little surprised to see the stock trading lower,” noted Matthew Hedberg, analyst at RBC Capital Markets, after the earnings came out. CEO Bill McDermott told analysts that Now Assist, the company’s flagship generative AI product, had exceeded $600 million in annual contract value by December’s end. The company is pushing to integrate AI features across its entire suite. (The Business Times)
ServiceNow pushed further with external model partners on the product front. It named Claude as the default model for its Build Agent. CEO Bill McDermott called the Anthropic partnership “turning intelligence into action through AI-native workflows.” Anthropic CEO Dario Amodei added that companies achieve better outcomes when they “make AI an integral part of how you get work done.” (ServiceNow Newsroom)
The company is also betting on OpenAI. ServiceNow announced a multi-year deal positioning OpenAI models as its go-to AI intelligence for customers, including work on built-in voice and speech-to-speech capabilities within its platform. “ServiceNow is helping enterprises bring agentic AI into workflows that are secure, scalable,” said OpenAI COO Brad Lightcap. (ServiceNow Newsroom)
Analysts started dialing back their price targets during the session. RBC Capital’s Matthew Hedberg cut his target to $185 from $195, while BMO Capital’s Keith Bachman trimmed his to $170 from $175, according to StreetInsider. (Streetinsider)
The risk is clear: integration costs from a buying spree could squeeze margins, while customers might turn to cheaper AI options if budgets shrink. Buybacks, meanwhile, often take a while to impact the tape, especially if sentiment remains weak.
Traders will be keeping an eye on the stock once the regular session kicks off at 9:30 a.m. ET, looking to see if it holds steady. Investors will also want updates from management on how the acquisition integration is progressing and any plans for monetising AI, expected to surface at upcoming investor meetings and industry events. ServiceNow’s next big public appearance is at Knowledge 2026 in Las Vegas, running May 5–7. (ServiceNow)
