ServiceNow Shares Stage a Rebound as Analysts Dismiss AI Fears

A significant rally in ServiceNow shares on Monday provided a welcome respite for investors following a brutal start to the year. The stock advanced approximately 3%, a move that coincided with analysts from Wedbush Securities pushing back against pervasive fears of an AI-induced collapse across the software sector.

The rebound was supported by commentary from Dan Ives, a strategist at Wedbush Securities. Over the weekend, Ives added both ServiceNow and Salesforce to the firm's proprietary "AI 30 List." His core argument is that the market is currently pricing in an overly pessimistic "doomsday scenario" for software companies—a scenario he believes is unlikely to materialize.

The reasoning centers on enterprise caution. According to this view, corporate clients are not going to hastily entrust their sensitive data to AI agents while migration projects remain complex and fraught with risk. Consequently, the anticipated cannibalization of traditional software business models by artificial intelligence is expected to be a slower, more gradual process than some fear.

Reflecting the broader sector move, the iShares Expanded Tech-Software Sector ETF (IGV) also climbed 3% on Monday. This followed a period of intense pressure earlier in 2026, during which hedge funds reportedly profited handsomely from short positions in software stocks—a clear indicator of the previously dominant negative sentiment.

A Challenging Year-to-Date Performance

Despite the day's recovery, ServiceNow's equity remains deeply in negative territory for 2026, showing a loss of roughly 32%. The company has been caught in an industry-wide rotation out of software names, a trend largely triggered by anxieties over potential AI disruption.

The company's Q4 2025 results, reported on January 28, were as follows:

Should investors sell immediately? Or is it worth buying ServiceNow?

• Subscription Revenue: $3.47 billion (a year-over-year increase of 21%)
• Total Revenue: $3.57 billion (up 20.5% YoY)
• Net Income: $401 million
• Current Remaining Performance Obligations (cRPO): $12.85 billion (a 25% YoY rise)

In addition to these figures, ServiceNow announced a new $5 billion share repurchase program, supplemented by a $2 billion accelerated share repurchase (ASR) agreement.

Strategic Acquisitions in AI and Security

To strengthen its platform, ServiceNow is pursuing an aggressive acquisition strategy:

• Moveworks: Acquisition finalized on December 15, 2025, adding agentic AI and enterprise search capabilities.
• Armis: A planned acquisition for the second half of 2026, aimed at integrating a leading cybersecurity platform.
• Veza: Planned for acquisition in the first half of 2026, focusing on identity security.

Furthermore, partnerships with AI leaders Anthropic and OpenAI are intended to embed advanced AI models more deeply into the company's workflow automation tools.

Financial Guidance for 2026

The company's outlook for the current fiscal year points to continued, albeit moderated, growth:

• Q1 2026 Subscription Revenue Forecast: $3.65 to $3.66 billion (representing 21.5% YoY growth)
• Full-Year 2026 Subscription Revenue Forecast: $15.53 to $15.57 billion (growth of 20.5% to 21% YoY)
• Non-GAAP Operating Margin: Projected at 32%

Investors are now looking ahead to the next quarterly earnings report, expected around April 21 or 22. The central question remains whether Monday's advance marks the beginning of a sustainable stabilization for ServiceNow shares or merely a temporary technical rebound within an ongoing downtrend.