New York, Feb 5, 2026, 17:46 (EST) — After-hours
- ServiceNow shares dropped roughly 7.6% Thursday, slipping to $102.63 in after-hours trading.
- U.S. software stocks dropped for the seventh day running, pressured by worries over AI-driven disruption and a pullback in spending.
- Traders are focused on the delayed U.S. jobs report set for Feb. 11 and the CPI data due Feb. 13 as the next key risk indicators.
ServiceNow (NOW) shares dropped roughly 7.6% on Thursday, ending the day at $102.63 in after-hours trading. During the session, the stock fluctuated between $112.24 and $100.03.
The selloff extended in U.S. software and data services stocks, with the S&P 500 software and services index tumbling 4.6%. Since Jan. 28, it’s now set to lose around $1 trillion in market value. Dubbed “software-mageddon,” the index has plunged roughly 21% below its 200-day moving average—a key long-term benchmark—as investors wrestle with how rapidly evolving AI might impact subscription software demand. 1
Wall Street’s wider mood weighed on sentiment. Alphabet revealed plans for up to $185 billion in capital spending by 2026, sparking investor doubts over whether this AI-focused spending spree will actually boost profits. “We’re seeing this volatility about whether this investment will translate, ultimately, into results,” said Tom Hainlin of U.S. Bank Wealth Management. Melissa Brown at SimCorp was more direct: the AI trade “was the accelerant last year” but “is perhaps the extinguisher this year,” hitting software stocks hard. 2
Not everyone is heading for the exits, but buying is cautious. The S&P 500 software and services index dropped 13% in the last week, wiping out over $800 billion in market value. James St. Aubin from Ocean Park Asset Management said the sell-off signals “an awakening to the disruptive power of AI” and stressed that “valuations must account for that.” Jake Seltz at Allspring has been adding to some positions, including ServiceNow, though he’s holding back until clearer signs emerge—like AI-driven product revenue and wider enterprise adoption. 3
ServiceNow insists AI is a boost, not a risk. Last week, it forecasted fiscal 2026 subscription revenue between $15.53 billion and $15.57 billion. The board also approved another $5 billion in share buybacks, with a $2 billion accelerated repurchase set to kick off soon. 4
The company has been linking itself closely with external AI models. ServiceNow and Anthropic announced that Claude is now the default for ServiceNow’s Build Agent, with ServiceNow confirming it has deployed Claude tools internally. CEO Bill McDermott described the tie-up as “turning intelligence into action.” Meanwhile, Anthropic CEO Dario Amodei cautioned companies against viewing AI as just a “bolt on.” 5
Macro data added to the risk-off sentiment. U.S. weekly jobless claims climbed to 231,000 for the week ending Jan. 31. At the same time, job openings dropped to 6.542 million in December, marking their lowest point in over five years, largely due to a steep fall in professional and business services. 6
The next key labor-market report will arrive on Feb. 11 at 8:30 a.m., according to the Bureau of Labor Statistics. Their schedule confirms the release of the January Employment Situation report on that date. 7
Inflation data follows soon after. According to the BLS calendar, the January 2026 CPI report will be released Feb. 13 at 8:30 a.m. 8
This remains a story about confidence as much as data. If investors continue to view new AI tools as direct replacements for parts of the software stack, the sector could face another wave of multiple compression—even if current revenue doesn’t take a steep hit.
ServiceNow now faces a key test: can its software slump hold steady through Friday’s session? The Feb. 11 jobs report will be crucial, either inviting buyers back into high-growth stocks or triggering another pullback.
