ServiceNow’s stock slid sharply after its third-quarter results, even as the company raised its AI outlook — a reaction that shows how unforgiving the market can be when a high-flying software stock fails to clear an elevated bar. According to reports, shares fell more than 10% in early post-market trading on Wednesday, with one analysis putting the drop at 17.2% to $124.46 immediately following the results.
ServiceNow Stock Slides as Earnings Miss Clouds Raised AI Outlook
The headline numbers were not weak on their face. ServiceNow’s Super Intelligence Control Tower strategy continues to gain momentum, helping the company achieve more than 20% revenue growth for the sixth consecutive quarter. But shares fell after earnings as adjusted earnings per share missed consensus, despite the strong revenue growth and raised outlook, according to Seeking Alpha.
Analysts also noted that revenue was just in line with expectations while billings missed. As StockStory put it, the quarter was “not good enough for a stock where there is skepticism around how AI could disrupt the company” — a reminder that for richly valued software names, meeting expectations is sometimes not enough.
AI Deals Grow Even as Shares Fall
Underneath the selloff, the company’s AI business kept expanding. ServiceNow exceeded its AI contract value targets, growing its AI contract value from $1 billion to $1.7 billion, and expanded partnerships including with OpenAI, according to Seeking Alpha. Stronger customer adoption, growing performance obligations, and efficiency improvements — particularly in AI and agentic enterprise services — were also cited as positives.
The contrast is the story: an uptick in multi-million-dollar AI deals and a raised outlook on one side, and a double-digit share slide on the other. MarketWatch’s framing captures it — even with the AI momentum, the earnings results were not enough to win over software skeptics who are weighing whether AI will disrupt enterprise software vendors or supercharge them.
For now, ServiceNow’s results leave investors split between the growth story in its AI contracts and the valuation question hanging over the whole software sector.
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Source: MarketWatch — read the full story there.
