Key Points
An analyst cut their price target for ServiceNow stock, but reiterated a buy rating.
Investors are nervous about ServiceNow being disrupted by artificial intelligence.
The best plan of action is likely to stay the course right now.
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Shares of ServiceNow (NYSE: NOW), a workflow automation company, were falling this morning as investors continued to view the company as vulnerable to disruption from artificial intelligence. Investors were also likely disappointed to see that one analyst cut his price target for ServiceNow. shares.
The company's share price was down by as much as 6% this morning, but had fallen by 3.5% as of 11:35 a.m. EST.
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Some investors are looking for any reason to sell
ServiceNow shareholders weren't pleased to see an analyst at Rothschild & Co. Redburn cut his price target for ServiceNow stock from $230 to $215 today. However, he reiterated his buy rating on the stock.
Investors have been nervous about ServiceNow as they try to assess how artificial intelligence may disrupt the company. While a price target cut on the stock isn't a specifically negative thing, especially considering the analyst still believes ServiceNow shares are a buy, jittery investors may be using it as a reason to sell their shares.
Investors have been more risk-averse lately, and many have pared back their positions of ServiceNow and other software stocks. Despite the company beating Wall Street's top and bottom-line estimates in the fourth quarter and issuing strong guidance, investors haven't been able to shake off their fears that the expansion of artificial intelligence companies will negatively impact the software company.
Patience is a better strategy than panicking
The mass exodus from software stocks over the past few months has been a bit dramatic. Investors appear to be guessing which companies will be negatively impacted by AI rather than following their sales and earnings results.
ServiceNow isn't immune from disruption, of course, but it's clearly been premature to assume AI will hurt the company, as it's topping analysts' consensus estimates and continuing to grow its business. Investors will get a clearer picture of how the company is doing when it reports its quarterly results next month, but for now, it's probably best for shareholders to stay the course and avoid panic selling.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
