Shares of ServiceNow, Inc. NOW plunged sharply on April 23, extending losses after first-quarter 2026 earnings failed to excite investors already wary of mounting global risks. The stock plunged as much as 17.8% during the session, after falling about 12% in pre-market trading, reflecting a swift negative reaction despite broadly in-line results.
The company posted first-quarter earnings of 97 cents per share, beating the Zacks Consensus Estimate by 2.11%. Earnings rose 19.8% year over year. Total revenues were $3.77 billion, beating the consensus mark by 0.57% and increasing 22.1% year over year. However, this was not enough to reassure investors in a market increasingly focused on forward-looking signals. Management flagged that the ongoing conflict in the Middle East disrupted its ability to close deals in the first quarter, a trend that could persist in the coming months.
ServiceNow’s business model, which depends heavily on large enterprise contracts, is particularly sensitive to delays in deal closures. Heightened geopolitical uncertainty has made corporations more cautious, slowing decision-making on significant technology investments. This dynamic has raised concerns about the durability of near-term growth across the enterprise software sector.
Despite the near-term challenges, the company highlighted strong traction in artificial intelligence (AI). The number of customers spending more than $1 million on its AI product suite, Now Assist, surged 130% year over year in the first quarter, underscoring robust demand for AI-driven workflow solutions. This momentum was overshadowed by macroeconomic concerns and the lack of upside in the quarterly results.
NOW, which carries a Zacks Rank #3 (Hold), is part of the Zacks Computers - IT Services industry. NOW’s shares have plummeted 44.6% year to date compared with a 16.6% fall for the industry. In the same period, two of its peers, Leidos Holdings, Inc. LDOS and DXC Technology Company DXC, have lost 18.2% and 18.7%, respectively. While DXC has a #2 (Buy), LDOS carries a #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bottom Line
The stock had already been under pressure, entering the session down roughly one-third for the year amid broader fears that rapid advancements in AI could disrupt traditional software models. The latest sell-off reinforces a shifting narrative on Wall Street, where even solid operational performance is being eclipsed by external risks and elevated investor expectations.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
