The stock has clawed back some ground since last week’s 18% rout, but the tension between strong operational performance and jittery market sentiment remains unresolved. ServiceNow shares closed Friday at $90.17, up 5.5% from the intraweek low, though still down roughly 39% year-to-date. The question hanging over the company now is whether the May 4 Analyst Day can provide the narrative shift investors are desperate for.
A Quarter That Delivered — Except for One Detail
ServiceNow’s first-quarter results were, by most measures, impressive. Total revenue hit $3.77 billion, a 22% year-over-year increase that comfortably beat the analyst consensus of $3.7 billion. Subscription revenue came in at $3.67 billion, also above the company’s own guidance. Earnings per share matched expectations precisely.
The current remaining performance obligations (cRPO) — a key forward-looking metric — rose 22.5% to $12.64 billion. That growth rate would have been even stronger if not for a single headwind: delayed on-premise deals in the Middle East, tied to regional geopolitical tensions, which shaved 75 basis points off the cRPO figure. Management has since confirmed that several of those deals closed in the early weeks of the second quarter.
The Armis Hangover
The market’s violent reaction on April 23 wasn’t about the core business. It was about the cost of transformation. ServiceNow closed its $7.75 billion all-cash acquisition of cybersecurity firm Armis on April 20, following the earlier purchase of identity security specialist Veza. The combined deals are designed to create an integrated security platform, but the price tag is squeezing margins.
For the second quarter, management expects a 125-basis-point margin drag from the Armis integration. For the full year, the operating margin headwind is pegged at 75 basis points. The company has also raised its full-year subscription revenue forecast to a range of $15.735 billion to $15.775 billion, but the margin compression is giving short sellers ammunition. Short interest has climbed 30% to roughly 38.95 million shares, representing about 3.8% of the float.
Institutions Double Down
Despite the bearish positioning, institutional investors are moving in the opposite direction. The Teachers Retirement System of Kentucky, for example, boosted its stake by 445% in the fourth quarter of 2025, bringing its holding to 274,000 shares. Overall, institutions now own 87% of ServiceNow’s outstanding stock.
Should investors sell immediately? Or is it worth buying ServiceNow?
The company has also authorized a $5 billion share buyback program, which provides a floor of sorts. But the real catalyst, bulls argue, is the accelerating AI business.
Now Assist Is the Story
ServiceNow’s generative AI product suite, Now Assist, is gaining traction faster than expected. The number of customers spending more than $1 million annually on Now Assist grew by over 130% year-over-year. CEO Bill McDermott has raised the AI-related annual contract value target for 2026 from $1 billion to $1.5 billion.
That momentum is central to the bull case. The Analyst Day on May 4 is expected to offer the first detailed look at how quickly enterprises are adopting the AI tools and what that means for long-term pricing and margins. One day later, the company’s Knowledge 2026 conference kicks off in Las Vegas, where new “Autonomous Workforce” features and an expanded partnership with NVIDIA are on the agenda.
What to Watch on May 4
The analyst consensus on ServiceNow sits at “Moderate Buy” with a median price target of $146.65. But the range is wide: Goldman Sachs sees the stock at $163, while KeyBanc is far more cautious at $85. The shares have been trading in a band between $84 and $103.
The May 4 event will be the management’s best chance to address the two biggest investor concerns: the margin trajectory after the current acquisition cycle and the pace at which Now Assist converts pipeline into recurring revenue. If the message is clear, the stock may finally find its footing. If not, the recovery from last week’s rout could prove short-lived.
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