ServiceNow Shares Struggle Amid Broader Tech Rally

While major U.S. technology indices surged to record levels last week, shares of workflow software specialist ServiceNow moved in the opposite direction. The divergence highlighted growing investor concerns that emerging artificial intelligence capabilities could disrupt established software business models.

Friday's trading session saw broad market gains, with the Nasdaq Composite climbing 2.18% to close at 23,031 points. This rally was powered significantly by hardware giants, notably NVIDIA, which saw its stock advance approximately eight percent. In stark contrast, ServiceNow equity edged lower, continuing a downward trend that began earlier in the week.

The stock traded between $101 and $103 over the period, culminating in a notable 7.6% decline on February 5th. This weakness persisted even as the Dow Jones Industrial Average broke through the 50,000-point milestone for the first time that same Friday.

AI Disruption Fears Weigh on Software Sector

Market analysts point to sector-specific anxieties to explain the underperformance. There is a mounting belief that new AI functionalities may place pressure on traditional Software-as-a-Service (SaaS) operations. This sentiment is currently weighing on major software providers, including Adobe and Salesforce, alongside ServiceNow. Concurrently, companies that manufacture the physical components powering AI are experiencing a tailwind.

Strategic Moves: Partnerships and Capital Return

In response to this shifting landscape, ServiceNow is aggressively pursuing its own AI integration strategy. In late January 2026, the company announced an expanded partnership with Anthropic. The collaboration aims to embed advanced AI agents directly into enterprise workflow platforms, an attempt to transform a potential competitive threat into a core product enhancement.

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

Furthermore, following a fourth-quarter earnings report that surpassed revenue expectations, the company's board has taken action to bolster shareholder confidence. A new share repurchase program authorizing the buyback of up to $5 billion in stock was approved.

Divided Analyst Sentiment Reflects Uncertainty

The market's confusion is mirrored in mixed research notes from financial institutions. On February 2nd, Goldman Sachs added ServiceNow to its prestigious "US Conviction List," issuing a Buy rating with a $216 price target—a strong endorsement of its long-term prospects.

However, the tone shifted as the week progressed. On February 5th, analysts at Truist Securities reduced their price target on the stock from $240 to $175, though they maintained a Buy recommendation. This adjustment underscores the ongoing tension between the company's solid fundamental growth and the contracting valuation multiples affecting the entire software sector.

The coming weeks will be critical for ServiceNow. Investors will be watching closely to see if its strategic AI partnerships can successfully fuel future growth, or if fears of technological disruption will continue to suppress its market valuation.