Software stocks slide as Fortinet, ServiceNow fail to meet lofty investor expectations
XLK•Software stocks fell in premarket trading after Fortinet and ServiceNow results disappointed investors, with Fortinet down 26% and ServiceNow down 18.5%.
1. Shares fall after results
Software shares tumbled in premarket trading on Thursday after Fortinet and ServiceNow results deepened concerns about AI disruption in the sector. Fortinet fell 26%, while ServiceNow slid 18.5% after a third-quarter profit miss overshadowed higher full-year subscription revenue and cash flow margin outlooks.
2. Analyst concerns spread
Fortinet raised its annual results expectations, but analysts pointed to slower revenue growth in its services unit. At least 14 brokerages cut price targets on Fortinet, while at least 10 lowered targets on ServiceNow. Salesforce fell 5.4%, Palo Alto Networks 6.5%, Atlassian 7% and Zscaler 5.8%. The S&P 500 Software & Services Index was up 6% year to date, about half the S&P 500's gain.
