New York, January 29, 2026, 11:43 EST — Regular session
- ServiceNow’s 2026 outlook is under scrutiny as traders consider its expensive acquisition plans
- Despite a larger buyback plan and new AI partnerships, the decline continues
- Analysts are cutting targets amid ongoing pressure on software valuations
ServiceNow shares dropped nearly 12% Thursday, pulling the enterprise software company down despite a 2026 subscription forecast that beat estimates. The stock hit a low of $113.63 before closing around $114.40, down roughly 11.7%.
The magnitude of the drop is significant because ServiceNow offers a clearer view into big-company software spending. When a stock like this takes a sharp hit after earnings, it usually drags down the broader workflow and IT software sector—if only briefly.
The timing coincides with investors grappling over whether “AI agents” — software capable of acting with minimal human involvement — will generate fresh, lasting demand or just rearrange existing budgets. ServiceNow is positioning itself as a key player in this transition, but the market wants concrete evidence in bookings and margins.
The Santa Clara, California-based company posted fourth-quarter subscription revenue of $3.466 billion and total revenue hitting $3.568 billion. Non-GAAP earnings came in at 92 cents per share. Its current remaining performance obligations (cRPO)—the contracted revenue expected over the next 12 months—climbed 25% to $12.85 billion. The firm also recorded 244 deals exceeding $1 million in net new annual contract value (ACV), a key bookings metric. CEO Bill McDermott said the company “significantly beat Q4 expectations.” 1
ServiceNow projects fiscal 2026 subscription revenue between $15.53 billion and $15.57 billion, beating the $15.21 billion consensus from Wall Street analysts tracked by LSEG. Rebecca Wettemann, CEO of analyst firm Valoir, noted the company is “growing both organically and by acquisition.” That approach, however, has become a sticking point for investors as ServiceNow expands deeper into security and customer tools. 2
A recent filing revealed that ServiceNow’s board greenlit an extra $5.0 billion for share buybacks, topping up roughly $1.4 billion left from previous authorizations at the end of last year. The company noted there’s no set expiration for the program, which can be halted or paused at any time. Management will decide when and how much to repurchase. 3
On the AI front, ServiceNow’s partner Anthropic has picked Claude as the default model for its ServiceNow Build Agent and favored it across its AI platform. Anthropic CEO Dario Amodei emphasized that companies see better outcomes when they embed AI into their workflows instead of treating it as just an add-on. 4
Still, Wall Street is dialing back expectations. RBC Capital’s Matthew Hedberg described the quarter as a “clean beat,” but lowered the price target to $185 from $195, pointing to multiple compression among software peers. The Outperform rating remains intact. 5
But the risk is clear: a stock won’t shake off doubts if investors suspect growth is just fueled by acquisitions, or if integration turns rocky. A slip in forward bookings, slower revenue from contracted backlog, or a slowdown in big enterprise projects would weigh on both the valuation and the story.
Investors now turn to more specifics on the $2 billion accelerated buyback plan, along with updates on organic growth and how deals are integrating. These are expected during appearances at the Bernstein TMT Forum panel on February 25 and the Morgan Stanley TMT Conference fireside chat on March 4, both events listed by the company. 6
