ServiceNow Shares Plunge 27 Percent After Third Quarter Results

ServiceNow shares dropped 27 percent on Thursday, October 29, 2026, after the enterprise software company reported third quarter results that fell short of earnings expectations. The decline reflected renewed investor concerns that artificial intelligence could disrupt traditional software business models, even as the company raised its full-year subscription revenue outlook and reported strong growth in AI-related contract value.

According to results reported by CNBC, ServiceNow generated $4.11 billion in revenue for the quarter, representing growth of more than 20 percent. The figure narrowly exceeded the $4.10 billion forecast from analysts surveyed by LSEG, but adjusted earnings of $1.00 per share fell below the $1.02 expected by analysts.

The share price decline put ServiceNow on course for its worst single-day performance on record. The results also intensified concerns commonly described as the SaaSpocalypse, referring to fears that increasingly capable AI tools could undermine established software companies and their existing business models.

Despite the market reaction, ServiceNow slightly increased its full-year 2026 subscription revenue forecast to between $15.78 billion and $15.79 billion. The company also recorded a 65 percent increase in net new AI average contract value, indicating substantial growth in the value of newly signed AI-related business.

Citi analyst Tyler Radke said the earnings report differed from ServiceNow's usual performance because it did not deliver the degree of upside investors had come to expect.

"This was a little bit uncharacteristic for ServiceNow standards, just in terms of the lack of upside," said Tyler Radke of Citi, as quoted by CNBC.

Investor concerns extend beyond the latest quarterly figures to the timing of returns from ServiceNow's investments in artificial intelligence. The company has established a forward-deployed engineering team that works directly with enterprise customers to develop AI solutions, but investors have yet to see the immediate financial impact some expected.

Radke said the market appeared to be looking for evidence of returns from those investments sooner than the company could deliver. The timing of that payoff has become a central issue as businesses commit billions of dollars to AI technologies and investors seek clearer evidence that the spending will translate into financial gains.

"It's just going to be a little bit longer of a waiting game, and so I think the market, you know, wanted to see something a little bit sooner," said Radke, according to CNBC. "I think you got to wait until next year to really see that inflection."

The broader third quarter earnings season was also showing strong growth across major US companies. A separate Yahoo Finance earnings update cited FactSet data showing that nearly one-quarter of S&P 500 companies had reported results, with aggregate earnings growth reaching 29.5 percent.

If that growth rate continued through the reporting season, it would represent the third consecutive quarter in which S&P 500 earnings increased by more than 25 percent. The results came as major companies across technology, energy, semiconductors, aerospace, automotive and pharmaceuticals reported their quarterly performance.

Microsoft, Alphabet, Amazon, Exxon Mobil, Intel, Boeing, Ford and Eli Lilly were among the companies featured in the earnings coverage. While the broader earnings picture pointed to robust corporate profit growth, ServiceNow's market reaction highlighted investor sensitivity to earnings surprises and uncertainty over how artificial intelligence will affect established software businesses.