ServiceNow Stock Plunges on Worst Day in Company’s History: AI Wins Can’t Hide a Bookings Slowdown

ServiceNow Inc. (NYSE:NOW) raised its artificial-intelligence sales target for the second time this year on Wednesday. Investors responded by wiping out nearly a quarter of its market value.

Shares fell 23.2% to $115.27 in early trading Thursday, according to Benzinga Pro data.

At that price, the decline erases about $36 billion in market value.

It is also the steepest one-day drop since the company listed in 2012. The previous record was the 17.7% slide on April 23.

As a result, ServiceNow’s two worst sessions as a public company both fall in the same year. Both came after quarters in which the company beat its own guidance.

So why does a company that keeps beating its targets keep getting punished? Investors are no longer asking whether AI is good for ServiceNow, but whether it is quietly rewriting how software gets sold.

ServiceNow Inc. daily price change since 2012. Source: TradingView

A Two-Cent Miss With a Clear Source

Third-quarter revenue rose 20.5% from a year earlier to $4.11 billion, ahead of the $4.09 billion consensus.

Adjusted earnings, however, came in at $1.00 per share, two cents below estimates.

The gap traces back to the balance sheet. ServiceNow spent about $9.2 billion on acquisitions in the first nine months of the year, including cybersecurity company Armis, and borrowed to pay for them.

Consequently, quarterly interest expense jumped to $81 million from $6 million a year earlier. Meanwhile, interest income fell to $69 million from $115 million as cash balances shrank, according to the company’s third-quarter results.

The Bookings Number Investors Watch Slowed

The bigger problem sits in the guidance.

ServiceNow defines current remaining performance obligations (cRPO) as contracted revenue it expects to recognize over the next 12 months. Investors treat the figure as the clearest read on future sales.

cRPO grew 21% in constant currency in the third quarter, to $13.65 billion. For the fourth quarter, the company guided to 18.5% growth.

That matters more than usual for ServiceNow. All year, the stock has been weighed down by fears that AI agents will shrink demand for software sold by the seat. A slowdown in forward bookings feeds that argument, even when the AI business itself is growing.

And the AI business is growing. ServiceNow lifted its 2026 AI annual contract value target to $1.7 billion, up from $1 billion at the start of the year. It also said agentic AI consumption in production is up more than 13-fold from a year earlier, and raised its free cash flow margin target to 36%.

Chief executive Bill McDermott called the quarter “the inflection point for ServiceNow as the Super Intelligence Control Tower.”

Software Stocks Follow ServiceNow Lower

The selloff spread across the sector.

The iShares Expanded Tech-Software Sector ETF (BATS:IGV) fell 3.3%. Salesforce Inc. (NYSE:CRM) dropped 4.6%, while Workday Inc. (NASDAQ:WDAY) lost 4%.

For ServiceNow, Thursday’s drop undoes much of a powerful comeback. From the April 23 close to its Oct. 23 close of $158.96, the stock had rallied 87.5%.

Shares are now 27% below that October peak. They remain 36% above the April low, but are down about 25% for the year.

Wall Street Trims Targets, With One Bear Holding Out

Four of the five firms that updated their views Thursday kept bullish ratings, according to Benzinga Analyst Ratings.

Cantor Fitzgerald reiterated Overweight with a $201 target. Piper Sandler kept Overweight at $175. Oppenheimer maintained Outperform at $165, and BTIG kept Buy while lowering its target to $150.

KeyBanc stood apart. The firm maintained its Underweight rating and raised its target to $110, still below where the stock now trades.

The quarter shows AI demand at ServiceNow is real and accelerating. The stock reaction shows investors are paying for the next 12 months of contracts, not for the AI headline.

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