ServiceNow $NOW ( ▲ 0.24% ) shares have been under pressure, and CEO Bill McDermott used the company’s earnings call to directly address investor concerns. His message was simple: recent acquisitions were about innovation, not plugging holes in the core business.
M&A fears spook investors
The stock’s slide has been tied largely to ServiceNow’s recent dealmaking, including its acquisition of cybersecurity firm Armis. Investors appeared worried the company was chasing growth through pricey takeovers rather than organic expansion.
McDermott pushed back on that narrative, saying the deals were aimed at expanding long-term opportunities and product capabilities, not masking any slowdown in its existing operations. He also emphasized that no major acquisitions are currently planned.
AI disruption worries loom
ServiceNow’s decline also comes amid broader anxiety around software stocks, as investors debate how AI tools could reshape or even replace parts of traditional enterprise software. Some analysts have pointed to slower-than-hoped AI monetization as a reason for caution on the name.
Even so, ServiceNow reported solid quarterly results and offered guidance that beat expectations, suggesting its core business remains healthy despite the market’s skepticism.
Confidence vs. caution
McDermott’s comments reflected confidence that investor fears are overblown. But with the broader software sector facing questions about AI disruption and elevated valuations, the stock’s recovery may depend on proving that its growth and AI strategy can translate into sustained revenue gains.
For now, ServiceNow $NOW ( ▲ 0.24% ) is trying to convince the market that its recent selloff says more about sentiment than about fundamentals.