Software stocks slide as Fortinet, ServiceNow fail to meet lofty investor expectations
FTNT•Software stocks fell in premarket trading after Fortinet shares dropped 25% and ServiceNow slid 18.1% following quarterly results. Fortinet raised its earnings and revenue expectations, while ServiceNow lifted its full-year subscription revenue and cash flow margin outlook despite a third-quarter profit miss.
1. Software shares fall
Software stocks tumbled in premarket trading after results from Fortinet and ServiceNow deepened worries about AI disruption. The S&P 500 Software & Services Index was up 6% year to date, about half the S&P 500's gains.
2. Fortinet and ServiceNow drop
Fortinet fell 25%, making it the biggest decliner on the S&P 500, despite outperforming in the third quarter and raising its earnings and revenue expectations. At least five brokerages cut their price targets on the company; Scotiabank lowered its target to $140 from $163 and said it wanted evidence of continued firewall momentum and greater enterprise traction for Fortinet's SASE and SecOps offerings. ServiceNow slid 18.1% as a third-quarter profit miss overshadowed higher full-year subscription revenue and cash flow margin outlooks.
3. Other stocks decline
Salesforce fell 4.3%, Palo Alto Networks dropped 6%, CrowdStrike lost 5% and Zscaler shed 5.8%. Alphabet's Google unveiled Gemini 4 Carbon on Wednesday, adding to competition in coding and cybersecurity systems.
