ServiceNow (NOW) falls 13.9% after AI-powered beat, outlook hike, and buyback approval expansion

• In late January 2026, ServiceNow reported fourth-quarter and full-year 2025 results showing increased revenue and profit, raised its 2026 subscription revenue outlook, expanded its stock repurchase authorization to $9.5 billion, and announced deepening AI collaborations and big business wins with partners such as Anthropic, Panasonic Avionics, and Fiserv.
• A key development was ServiceNow’s emphasis on rapid adoption of AI across its platforms, including Now Assist and Claude-powered Build Agent, amid growing market-wide anxiety about the potential for AI to undermine traditional software business models.
• Next, we consider how strong momentum in AI-powered platforms and growing concerns about disruption could reshape the investment story for ServiceNow.

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What is the ServiceNow investment story?

To own ServiceNow today, you need to believe that its AI-centric workflow platform will remain mission-critical for large enterprises, even as investors question whether new AI agents will erode traditional software models. The latest quarter confirmed that core idea. Sales and profits have increased, management has raised its 2026 subscription revenue outlook, and while many of its peers are on the defensive, the company has rallied with a massive $9.5 billion stock buyback. At the same time, stocks are selling off heavily as the market focuses on the risk that tools like Anthropic’s Claude and OpenAI’s agents could drive down software prices or replace packaged workflows. ServiceNow’s response is to deeply embed these same models into Now Assist and Build Agent, showcasing real customer successes with Panasonic Avionics and Fiserv, effectively turning perceived threats into short-term catalysts. Whether this theory holds true will determine how the current disconnect between strong reported earnings and weak stock performance is resolved.

However, investors should not ignore how quickly AI’s pricing power will change for software vendors. Despite the setback, ServiceNow stock may still be trading at 40% above its fair value. Discover the potential downside here.

explore other perspectives

The 14 fair value estimates published by the Simply Wall St Community range from approximately US$169,000 to a very high US$904,000, highlighting how divergent individual views can be. When you weigh this against the recent AI-driven stock decline and questions about whether agent tools will weigh on ServiceNow’s high revenue multiples, it becomes clear that we’re weighing a very different story about the company’s future role in enterprise software.

Check out 14 other fair value estimates on ServiceNow – Why the stock is worth more than 8x its current price!

Build your own ServiceNow narrative

Don’t agree with this assessment? Create your own story in under 3 minutes. Following the herd rarely yields exceptional investment returns.

• A great starting point for ServiceNow research is an analysis that reveals three key benefits that can influence your investment decision.
• Our free ServiceNow research report provides comprehensive fundamental analysis compiled into a single visual (Snowflake), making it easy to assess ServiceNow’s overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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