ServiceNow Stock Drops as Earnings Miss Overshadows Raised AI Outlook

ServiceNow shares slid after its latest quarterly results fell short of Wall Street expectations, even as the company raised its full-year forecast for artificial intelligence-driven revenue. The Santa Clara, California-based software maker reported earnings per share of $3.67, missing analyst estimates by $0.03, while revenue of $2.96 billion narrowly beat projections. Investors focused on the bottom-line miss, sending the stock down more than 5% in after-hours trading. The decline came despite a notable increase in large AI deals—the company said it closed 126 transactions worth over $1 million in the quarter, up 50% from a year earlier. ServiceNow also lifted its 2025 subscription revenue guidance to between $12.99 billion and $13.04 billion, citing momentum in its generative AI offerings. However, analysts noted that rising costs tied to AI infrastructure and slower expansion in core IT service management weighed on margins. The mixed report underscores the challenge facing enterprise software vendors: even as AI demand accelerates, investors are demanding clearer signs that these investments will translate into durable profit growth. ServiceNow’s next few quarters will be critical to prove that its AI push can drive both top-line acceleration and margin stability.