ServiceNow Suffers Worst Single-Day Drop on Record After Q4 Guidance Miss Sparks AI Revenue Doubts

ServiceNow shares collapsed by as much as 22% to 24% on October 29, marking the stock's largest intraday decline since at least 2016 and by some accounts since its 2012 IPO, after the enterprise software company's third-quarter results and fourth-quarter guidance failed to meet elevated investor expectations. The stock fell to around $121, its lowest level since late August and roughly 24% below its 2026 high, deepening a loss that already had the stock down 20% over the prior year.

Q3 revenue came in at $4.11 billion with a gross margin of 77.5%, beating top-line estimates, but GAAP EPS of $0.27 fell short of forecasts. The critical blow came from the company's outlook for fourth-quarter current remaining performance obligations, a closely watched measure of contracted future revenue, which missed the average analyst estimate and raised concern about the pace of new enterprise commitments. CEO comments framing the quarter as "the inflection point for ServiceNow as the Super Intelligence Control Tower" did not reassure investors who had priced in more concrete AI-driven acceleration.

Analyst reactions were mixed but skewed cautious on valuation. Morgan Stanley, Mizuho, Truist, and TD Cowen all cut their price targets citing revenue headwinds and softer guidance. Guggenheim maintained its Buy rating with a $175 target, Canaccord reiterated Buy into the selloff, KeyBanc raised its target citing valuation rebound potential, and JPMorgan flagged a bright spot in the results even as the stock was tracking its record drop. Evercore ISI and Stifel also held their ratings, pointing to AI progress.

The selloff rippled across the software sector. Fortinet fell 26% on its own disappointing service-revenue outlook, while Salesforce dropped 6%, Workday declined 5%, and SAP shares fell in sympathy. ETFs with heavy ServiceNow exposure came under additional pressure. The combined earnings-driven weakness in ServiceNow and Fortinet revived broader concerns about whether the enterprise software industry can convert massive AI investment into durable revenue growth, a worry that has weighed on the sector throughout 2026.