Software Stocks Face Intense Sell-Off Amid AI Fears
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 29 2026
0mins
Should l Buy NOW?
Source: CNBC
- Market Sentiment Shift: The iShares Expanded Tech-Software Sector ETF (IGV) dropped about 5% in morning trading, marking its largest one-day decline since last April, indicating a sharp decline in investor confidence as the fund is now down approximately 21% from its recent high, entering bear market territory.
- ServiceNow Stock Plunge: Despite ServiceNow exceeding Wall Street's fourth-quarter earnings expectations and issuing better-than-expected guidance, its shares fell over 11% on Thursday, reflecting that stable growth is insufficient to shift the narrative in an environment of heightened skepticism towards traditional software vendors.
- Microsoft Hit Hard: Microsoft slid about 10% after reporting a slowdown in cloud growth, on track for its steepest one-day drop since March 2020, while also issuing softer-than-expected guidance on operating margins for the fiscal third quarter, amplifying investor unease.
- AI Threat Intensifies: The rapid development of artificial intelligence has heightened investor concerns about the potential erosion of demand for traditional software licenses and workflows, leading to a reassessment of valuations in the software sector as AI is perceived to potentially shrink long-term revenue prospects permanently.
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Analyst Views on NOW
Wall Street analysts forecast NOW stock price to rise
32 Analyst Rating
30 Buy
2 Hold
0 Sell
Strong Buy
Current: 88.310
Low
172.00
Averages
222.81
High
263.00
Current: 88.310
Low
172.00
Averages
222.81
High
263.00
About NOW
ServiceNow, Inc. provides an artificial intelligence (AI) platform for business transformation. The Company’s AI platform connects people, processes, data, and devices to increase productivity and maximize business outcomes. Its intelligent platform, the Now Platform, is a cloud-based solution that helps enterprises and organizations across public and private sectors digitize workflows. The workflow applications built on the Now Platform are organized into four primary areas: Technology, CRM and Industry, Core Business and Creator. Its products include IT Service Management, IT Operations Management, HR Service Delivery, ServiceNow AI Agents, AI Experience, Build Agent, ServiceNow AI Control Tower, AI Agent Fabric, RaptorDB, Workflow Data Fabric, Workplace Service Delivery, ServiceNow Platform Encryption, Telecommunications Service Operations Management, and others. The Company also offers identity security, helping organizations secure access across the enterprise.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Apple's Strong Earnings: Apple Inc. (AAPL) reported Q2 revenue of $111.18 billion, exceeding the consensus of $109.66 billion, and forecasted Q3 revenue growth of 14% to 17%, significantly above the expected 9.1%, which propelled the Dow Jones Industrial Average up over 4%.
- Software Stocks Surge: Atlassian (TEAM) posted Q3 revenue of $1.79 billion, surpassing the consensus of $1.69 billion, leading to a stock price increase of over 20%, which not only boosted the software sector but also enhanced investor confidence in tech stocks.
- Oil Price Volatility: WTI crude oil prices fell more than 3% due to developments in the US-Iran agreement, temporarily easing inflation concerns and contributing to stock market gains, highlighting the energy market's influence on the overall economy.
- Weak Manufacturing Data: The April ISM manufacturing index remained unchanged at 52.7, below the expected 53.2, while the prices paid sub-index rose to a four-year high of 84.6, indicating increasing price pressures that could impact Federal Reserve policy decisions.
See More
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- Apple's Strong Earnings: Apple Inc. (AAPL) reported Q2 revenue of $111.18 billion, exceeding the consensus of $109.66 billion, and forecasted Q3 revenue growth of 14% to 17%, significantly above the 9.1% estimate, which propelled the Dow Jones Industrial Average up over 4%.
- Software Stocks Surge: Atlassian (TEAM) posted Q3 revenue of $1.79 billion, surpassing the consensus of $1.69 billion, leading to a stock price increase of over 25%, which not only boosted the software sector's performance but also enhanced investor confidence in tech stocks.
- Oil Price Fluctuations: WTI crude oil prices fell more than 1% after Iran responded to the latest US amendments on the agreement, despite an early advance, indicating that inflation concerns may be easing, but geopolitical factors remain a potential risk for oil prices.
- Overall Market Performance: So far, 81% of the 303 S&P 500 companies that reported Q1 earnings have beaten estimates, with overall Q1 earnings projected to climb 12% year-over-year, suggesting that improving corporate profitability may continue to support stock market gains.
See More
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- Workday Performance: Workday's revenue increased by 3% in the latest reporting period.
- Salesforce Growth: Salesforce reported a 2% rise in sales.
- Zscaler and Intuit Results: Zscaler's revenue grew by 1.4%, while Intuit saw a 1.7% increase.
- ServiceNow and Datadog Updates: ServiceNow's revenue was up by 2.6%, and Datadog experienced a 0.7% growth.
See More
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U.S. Software Stocks Surge: U.S. software stocks have experienced a significant increase following a positive annual revenue forecast from Atlassian.
Atlassian's Revenue Growth: The company has raised its annual revenue forecast, indicating strong performance and optimism in the software market.
See More
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- Investor Confidence Boost: The management team is attempting to enhance investor confidence in the company's future growth by emphasizing the positive impact of artificial intelligence, which is expected to attract more investor interest.
- Positive Market Reaction: As of the afternoon of April 28, 2026, stock prices showed a slight increase, reflecting market recognition of the management's AI strategy, which may promote further stock price appreciation.
- Clear Strategic Direction: The management has clearly stated that AI will be a crucial driver for the company's future development, planning to increase the application of AI technology in upcoming products and services to enhance competitiveness.
- Long-Term Growth Potential: By positioning AI as a tailwind for business growth, the management aims to achieve sustainable revenue growth over the coming years, thereby strengthening the company's market position and profitability.
See More
Atos Recognized as Leader in ISG 2026 Report for ServiceNow Ecosystem Partners
- Leadership in Europe: Atos has been recognized as a Leader in the ISG Provider Lens® 2026 report for ServiceNow ecosystem partners, particularly in the Innovation and Consulting & Implementation Services quadrants, highlighting its ability to deliver secure and compliant ServiceNow innovations in highly regulated environments, thereby enhancing its competitive edge in the market.
- Growth in the U.S. Market: Atos has also been named a Leader in ServiceNow Consulting and Implementation Services in the U.S., leveraging successful large-scale replatforming projects and industry-aligned blueprints to accelerate adoption of the Now Platform, further solidifying its market position in North America.
- Outstanding Innovation Capabilities: The ISG report emphasizes Atos' AI Insight and AI Ignite frameworks, which support the modernization of intelligent workflows on the ServiceNow platform, enabling clients to deploy solutions safely in complex IT environments, thus enhancing business value and operational efficiency.
- Strategic Investment and Development: Atos' global head of ServiceNow stated that ongoing investments in AI and security allow the company to maintain its leadership position in both European and U.S. markets, driving digital transformation and delivering maximum value to clients, further reinforcing its image as a trusted partner.
See More
