NEW YORK, February 3, 2026, 12:48 (EST) — Regular session
- ServiceNow shares slide during midday trading amid a sell-off in software stocks
- Concerns over AI disruption loom, fueling wider daily swings in the sector
- With earnings season underway, attention shifts to key corporate catalysts on the horizon
ServiceNow shares dropped 8.1% to $108.40 Tuesday, after closing Monday at $118.00. The stock hit a low of $108.40 and reached an intraday high of $119.20.
The drop came amid a wave of selling in software and cloud stocks, dragging the broader market lower. The S&P 500 software and services index fell 3.3%, set for its fifth consecutive day of losses. “Many areas, especially around AI, are priced for perfection,” said John Campbell, senior portfolio manager at Allspring Global Investments. Investors are now turning their attention to earnings reports from Alphabet and Amazon due later this week. Reuters
Why it matters now: this is shifting from a one-company issue to a broader rethink of how growth software is valued. The key question: can these companies continue raising prices on subscriptions and add-ons as AI tools become cheaper and more powerful?
Traders and analysts pointed to the rollout of a legal plug-in for Anthropic’s Claude chatbot as a key spark, rekindling fears that AI might erode revenue streams previously seen as safe bets. “You start to worry about whether you can earn the money back,” said Lars Skovgaard, senior investment strategist at Danske Bank, as losses hit U.S. software and cloud giants like Microsoft, Salesforce, and Adobe. Reuters
ServiceNow, known for software that streamlines workflows and IT operations, last week projected fiscal 2026 subscription revenue above Wall Street expectations. The firm also announced tighter AI collaborations with Anthropic and OpenAI, greenlit an extra $5 billion for share buybacks, and revealed plans for a $2 billion accelerated repurchase soon. On the deal front, ServiceNow agreed to acquire cybersecurity startup Armis for $7.75 billion. “ServiceNow is growing both organically and by acquisition,” noted Rebecca Wettemann, CEO of analyst firm Valoir. Reuters
Tuesday’s slide highlighted just how tight the margin is for high-priced software stocks when sentiment turns. Quick reversals often trigger momentum-driven funds, driving moves far beyond what the day’s news would imply.
But investors are wary of a downside risk: if customers reduce spending or delay projects, renewal growth could stall, triggering price cuts as vendors scramble to hold on to market share. AI adds another layer of uncertainty — it might boost demand, but also shift customer expectations on pricing.
Traders are now waiting for clear proof that AI features are moving beyond demos to actual billable services, with major clients still locking in hefty subscription contracts. A crucial event on the horizon is ServiceNow’s Knowledge conference in Las Vegas, set for May 5–7.
