ServiceNow drops as AI-competition fears drive valuation reset and fresh target trims
ServiceNow shares are sliding after a fresh valuation reset across high-multiple software, with investors leaning on cautious 2026 growth expectations rather than last quarter’s beat. The move follows repeated analyst trims to price targets and fair-value estimates tied to AI-driven competitive fears and multiple compression.
1) What’s driving the selloff
ServiceNow (NOW) is trading lower as investors continue to reprice high-multiple enterprise software names, keeping the focus on forward growth durability and competitive pressure from increasingly capable AI agents. The stock’s weakness fits a pattern seen since the company’s late-January 2026 outlook, where guidance and narrative risk around AI disruption have outweighed strong historical execution for many market participants. (forbes.com)
2) The analyst/valuation backdrop investors are reacting to
In recent weeks, the pressure on ServiceNow has been amplified by valuation-oriented resets from research coverage: some analysts have lowered price targets (while often maintaining positive ratings), and fair-value frameworks have also been marked down on AI-related uncertainty. This repeated target-trim drumbeat has kept incremental buyers cautious and has increased sensitivity to any broader risk-off tape in software. (investing.com)
3) Context: guidance and AI narrative remain the swing factors
The key debate remains whether ServiceNow can sustain premium growth while defending its workflow franchise as AI-first tooling spreads. After its Q4 2025 results, the market reaction centered on whether 2026 subscription growth expectations were strong enough to justify the prior “AI premium,” a dynamic that has continued to weigh on the stock’s multiple. (forbes.com)
4) What to watch next
Near-term, traders will watch for additional research notes, any change in sentiment on ServiceNow’s AI monetization trajectory, and whether the broader software group stabilizes. Company-specific catalysts that can shift the narrative include updates on AI product adoption and visibility into 2026 subscription revenue progression, including contributions from Moveworks following its closing in December 2025. (s205.q4cdn.com)