New York, Jan 29, 2026, 17:45 EST — After-hours
ServiceNow shares dropped roughly 10% on Thursday, closing the regular session near $116.73 before slipping to $113.14 at their low. After-hours trading saw the stock down 9.9%, despite the company’s upbeat forecast, as software stocks broadly sold off.
The drop is significant as investors recalibrate their expectations for subscription software following a series of sharp earnings reactions in the sector. SAP’s cloud outlook, combined with declines in U.S. software stocks, sparked concerns that new AI tools might disrupt software-as-a-service (SaaS) firms relying on cloud subscriptions. “The market’s kind of…pricing a worst-case scenario that software is dead because AI is disrupting the space,” said Adam Turnquist, chief technical strategist at LPL Financial. Reuters
ServiceNow late Wednesday raised its fiscal 2026 subscription revenue forecast to $15.53 billion–$15.57 billion, beating the analyst consensus of $15.21 billion, per LSEG data. The company also expects first-quarter subscription revenue between $3.65 billion and $3.66 billion, topping estimates of $3.57 billion. It highlighted expanding partnerships with Anthropic and OpenAI as it integrates more AI capabilities across its platform. Reuters
The company reported fourth-quarter subscription revenue of $3.466 billion and total revenue hitting $3.568 billion. The board greenlit an extra $5 billion for share buybacks and announced plans for an “imminent” $2 billion accelerated share repurchase — a move that usually means shares will be retired quickly via a bank intermediary. ServiceNow Newsroom
Investors remain wary about deal risk as ServiceNow moves deeper into security. In December, the company struck its largest deal yet, agreeing to acquire cybersecurity startup Armis for $7.75 billion. This move aims to strengthen its foothold in cyber exposure management. Reuters
ServiceNow wrapped up its acquisition of Moveworks last December, bringing an enterprise AI assistant and search product into its portfolio. The company says this move integrates AI more deeply into daily workflows, though some investors remain skeptical about how fast these tools will translate into steady subscription revenue. Moveworks
Thursday’s sell-off seemed driven less by company specifics and more by a broader sector reset. Traders grouped ServiceNow with other high-multiple software stocks amid ongoing debate about what “AI-enabled” actually implies for pricing power and renewal rates.
The risk cuts both ways. Should customer budgets shrink or AI capabilities turn into baseline expectations industry-wide, ServiceNow might have to boost spending on product development and sales just to maintain growth. On top of that, integrating major acquisitions could sidetrack management and push back returns.
Investors will be watching to see if upcoming sessions trigger more analyst downgrades in enterprise software, and if buyers return after the broader risk-off mood eases.
ServiceNow’s next big event is its Knowledge 2026 conference, set for May 5-7 in Las Vegas. Investors will be watching closely for fresh product updates and new customer deals to support the company’s growth narrative. servicenow.com
