The enterprise software sector found itself at the center of a heated debate this week, with ServiceNow shares caught in the crossfire. A speculative research note triggered a broad sell-off in software stocks on Monday, followed by a partial recovery on Tuesday. The core question driving market sentiment is whether artificial intelligence will ultimately act as a deflationary force on software pricing or become its next major growth catalyst.
A Speculative Scenario Sparks Volatility
Market pressure originated from a scenario analysis published by Citrini Research on Substack. While explicitly framed as a hypothetical outlook from June 2028 and not a formal forecast, its content resonated with investors. The analysis painted a picture where accelerated AI capabilities displace office jobs, and so-called “agentic” coding tools enable developers to replicate mid-market SaaS products within weeks. This scenario suggested potential future pressure on software pricing and customer renewal rates. ServiceNow was mentioned directly within these projections.
The resulting sell-off was significant. According to Investing.com data, ServiceNow equity declined approximately 4%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 5%. The weakness was broad-based, affecting other major names: DoorDash dropped 7%, Salesforce declined 5%, while MongoDB and AppLovin each slid 8%. Even financial giants Visa, Mastercard, and American Express lost over 4% each on the day.
Technical Weakness Persists Despite Brief Rebound
A measure of stability returned on Tuesday. ServiceNow shares advanced roughly 1.6% intraday to approximately $102.46, closing at $102.52 according to Public.com. Yahoo Finance attributed the stabilization in part to improved broader market sentiment, with the Dow Jones and S&P 500 indices each gaining about 0.8%.
However, the technical picture remains challenging. MarketBeat data shows the current share price trading well below both the 50-day moving average of $130.57 and the 200-day moving average of $161.13. Since the start of the year, the stock is down approximately 34%, as reported by Motley Fool on Tuesday.
Strategic Moves and Insider Confidence Amid Market Pressure
Concurrently with the market volatility, ServiceNow continues to advance its strategic AI initiatives. On Monday, the company announced a multi-year partnership with Tata Consultancy Services (TCS) aimed at accelerating enterprise AI adoption, focusing on back-office processes in HR, finance, supply chain, and procurement.
Should investors sell immediately? Or is it worth buying ServiceNow?
This follows the company’s announcement in early February (reported on February 12 by outlets including Futurum Group and CIO.com) of its intent to acquire Pyramid Analytics. The goal is to embed AI-powered analytics deeper into its platform and expand beyond pure workflow automation.
Management provided another notable signal. As detailed in an SEC filing dated February 17 and reported by Barron’s, MarketWatch, and Sherwood News, CEO Bill McDermott indicated a plan to purchase $3 million worth of stock on February 27. Simultaneously, four other top executives—including CFO Gina Mastantuono—terminated their automated 10b5-1 trading plans for selling shares.
Solid Fundamentals and Capital Return
The company’s latest quarterly results, released January 28, demonstrated continued robust performance. Subscription revenue for the fourth quarter reached $3.47 billion, a 21% year-over-year increase. Current Remaining Performance Obligations (cRPO) grew to $12.85 billion, up 25%. ServiceNow also reported 244 deals with over $1 million in net new Annual Contract Value (ACV), a 40% increase. ACV for its AI product “Now Assist” more than doubled year-over-year.
Looking ahead, ServiceNow provided a subscription revenue outlook of approximately $15.5 billion for 2026, representing roughly 20% growth on a constant currency basis. Additionally, the board authorized an incremental $5 billion for share repurchases and announced an accelerated share repurchase (ASR) program of $2 billion.
These developments highlight a tension within the business model. The traditional per-seat licensing structure could face headwinds if AI enables companies to operate with fewer employees. Conversely, ServiceNow is developing usage-based pricing for its AI features—a model that may introduce less predictability to revenue streams.
The next quarterly report is anticipated around April 22, according to Yahoo Finance. Its release will likely indicate whether the stock has found a floor following the AI-driven sector shock or if pressure on software valuations persists.
Ad
ServiceNow Stock: Buy or Sell?! New ServiceNow Analysis from February 25 delivers the answer:
The latest ServiceNow figures speak for themselves: Urgent action needed for ServiceNow investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 25.
ServiceNow: Buy or sell? Read more here...
