$NOW beat earnings. Beat revenue. Raised guidance. Announced an Anthropic partnership and an OpenAI deal. The stock dropped another 10%.
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Over the past year, ServiceNow has lost 45% of its value. It's down 28% just in 2026. And the company has done absolutely nothing wrong.
What's Actually Happening
Wall Street has decided that AI is going to kill SaaS. The thesis goes like this: why pay monthly subscriptions for workflow software when you can spin up an AI agent to do the same thing? Hyperscalers are pouring hundreds of billions into cloud AI services. Enterprise software is the collateral damage.
$NOW is getting punished for being the biggest name in the blast zone.
The Numbers Tell a Different Story
| Metric | Q4 2025 | vs. Estimate | YoY Growth |
|---|---|---|---|
| Revenue | $3.57B | Beat ($3.53B) | +20.5% |
| EPS (adj.) | $0.92 | Beat ($0.88) | +26% |
| Subscription Revenue | $3.47B | Beat ($3.42B) | +21% |
| cRPO (backlog) | $12.85B | — | +25% |
| Renewal Rate | 98% | — | Stable |
Full-year subscription revenue hit $12.88B, up 21%. The 2026 guide? $15.5B+. That's not a company watching its business evaporate.
The board just approved another $5B in buybacks. You don't do that if you think your stock is fairly priced on the way down.
The SaaS-Is-Dead Narrative Has a Problem
Here's the thing about "AI will replace SaaS" — ServiceNow isn't some niche tool that an LLM prompt can replicate. Over 8,000 companies use it as their operational backbone. It manages IT workflows, HR processes, customer service, security operations. It's deeply embedded infrastructure.
Ripping out ServiceNow and replacing it with ChatGPT isn't a weekend project. It's an 18-month migration that most CIOs won't even consider.
And ServiceNow knows this. Instead of running from AI, they're absorbing it:
- Moveworks acquisition ($2.85B) — AI-powered employee service, now integrated into the platform
- Armis deal ($7.75B) — cybersecurity bolted onto their security operations suite
- Anthropic partnership — Claude models directly available to NOW customers for building workflow apps
- OpenAI integration — ChatGPT models baked into the platform
CFO Gina Mastantuono was blunt: "Our acquisitions are 100% not a pivot away from organic growth. They represent an acceleration of it."
The Valuation Makes No Sense
At $107/share, $NOW trades at 32x earnings. For a company growing revenue 20%+ with 98% retention and $12.85B in backlog.
For context, the S&P 500 average P/E is around 25x with mid-single-digit growth. You're paying a modest premium for a company growing 4x faster with sticky, recurring revenue.
The last time $NOW was this cheap relative to its growth, it tripled over the following two years.
The Bear Case (And Why It's Thin)
The real risk isn't that AI kills ServiceNow. It's that the AI spending cycle creates a prolonged rotation out of software and into infrastructure. Money flows to NVDA, picks-and-shovels plays, and hyperscalers. SaaS gets ignored even as fundamentals hold.
That can continue. Stocks can stay irrational for quarters.
But the fundamentals eventually matter. A company growing 20% with near-perfect retention doesn't trade at 32x forever — it either re-rates higher or gets acquired by someone who sees the value.
Bottom Line
The market is treating $NOW like AI is an existential threat. The numbers say it's an accelerant. Revenue growing, backlog expanding, margins stable, and now AI partnerships with both Anthropic and OpenAI.
At 45% off its highs with every fundamental intact, this looks like a classic fear-driven dislocation. ServiceNow isn't dying — the market just hasn't noticed yet.
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