NOW Stock’s Plunge Today Takes 2026 Losses To 45% — Analyst Warns Penalty For Missteps Is Severe As AI Startups Ramp Up Enterprise Offerings

• KeyBanc analysts highlighted that ServiceNow missed out on some deals in the Middle East during the quarter.
• The firm also stated that the company’s margin guidance is declining due to acquisitions, and that ServiceNow’s current Remaining Performance Obligations were skinnier than usual in Q1.
• Jefferies analysts stated that, following ServiceNow’s Q1 performance, investor sentiment is likely to remain muted until the company’s analyst day on May 4.

Shares of ServiceNow Inc. (NOW) fell more than 17% in Thursday morning’s trade, extending the stock’s 2026 losses to over 45% after the company reported its first-quarter (Q1) results on Wednesday after the closing bell.

The company reported earnings per share (EPS) of $0.97, in line with estimates, while revenue of $3.77 billion beat expectations of $3.75 billion by a whisker.

Wall Street Strikes A Note Of Caution

ServiceNow’s performance during the quarter resulted in a slew of price target cuts. According to TheFly, analysts at Truist warned that the penalty for missteps is severe at a time when frontier AI labs like OpenAI and Anthropic are ramping up their enterprise offerings.

The firm lowered its price target for ServiceNow to $120 from $125 while keeping a ‘Buy’ rating. Truist added that the company's reiteration of its guidance on organic subscription revenue left investors wanting more.

Analysts at Jefferies also lowered their price target for ServiceNow to $135 from $175, while keeping a ‘Buy’ rating. The firm stated in its note that, following ServiceNow’s Q1 performance, investor sentiment is likely to remain muted until the company’s analyst day on May 4.

KeyBanc analysts highlighted that ServiceNow missed out on some deals in the Middle East during the quarter. The firm also stated that the company’s margin guidance is declining due to acquisitions, and that ServiceNow’s current Remaining Performance Obligations (RPO) were skinnier than usual in Q1.

KeyBanc slashed its price target for NOW stock to $85 from $115, while keeping an ‘Underweight’ rating.

Analysts at BMO Capital echoed similar sentiments, stating that ServiceNow’s current RPO guidance was disappointing. The firm trimmed its price target for ServiceNow to $115 from $120, while maintaining its ‘Outperform’ rating.

ServiceNow Flags Iran War Impact On Subscriptions

ServiceNow stated that subscription revenue in Q1 came in at $3.67 billion, representing 22% year-on-year growth. The company added that this would have been higher if not for tensions in the Middle East, while flagging a 75-basis-point headwind to growth from delayed closings of several large on-premises deals in the Middle East.

“There is a slight impact to the guide in going forward in Q2 as a result of the war, because you have to remember, when you're dealing with a sovereign cloud in the Middle East, everything that happens in the Middle East is recognized as on-premise revenue. It's not linear or ratable. It happens all at once,” ServiceNow CEO Bill McDermott said during the earnings call.

How Did Retail Traders React?

Retail sentiment on Stocktwits around ServiceNow trended in the ‘extremely bullish’ territory with message volumes at ‘extremely high’ levels at the time of writing.

One user stated that the NOW stock is still overpriced and added that AI is the future, not software.

NOW stock is down 45% year-to-date and 47% over the past 12 months. The S&P 500 ETF (SPY) and the Vanguard Total Stock Market Index Fund ETF (VTI) are up 33% over the past 12 months.

The Vanguard Growth Index Fund ETF (VUG) is up 37% during this period, while the iShares Russell 1000 Growth ETF (IWF) is up 36%.

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