When Nasdaq (QQQ) rallied to new highs and Adobe Systems (ADBE) announced a big stock buyback, it looked like SaaS (software) would rebound.
ServiceNow (NOW) shattered that perception. The company posted quarterly results that met expectations, but acquisition costs disappointed investors. In the first quarter, non-GAAP EPS of $0.97 met expectations. Revenue grew by 22% Y/Y to $3.77 billion. For Q2/2026, it is forecasting subscription revenue growth of 22.5%.
NOW stock might open down by around 12% this morning. Despite fundamentals improving against an AI narrative backdrop, ServiceNow has multiple catalysts. CEO Bill McDermott bought shares at $105. So, patient investors might wait for the stock to fall back to the $80s. Holding shares for the long-term should pay off, since AI is not threatening ServiceNow’s core business.
In the quarter, the company closed its Armis acquisition early. That will expand its total addressable market. More importantly, subscription revenue will grow at a better pace. AI is a tailwind, too. Agentic AI, workflow orchestration, security, and data fabric are on a single platform.
In its press release, ServiceNow highlighted that it delivered a complete AI-native experience. Context Engine is built around organizational intelligence. That will output AI decisions using live enterprise context.
It launched Autonomous Workforce. That should help customers process service desk IT support requests more effectively.
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