Software Stocks Face Intense Sell-Off Amid AI Fears
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 18h ago
0mins
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 over the next 12 months. According to Wall Street analysts, the average 1-year price target for NOW is 222.81 USD with a low forecast of 172.00 USD and a high forecast of 263.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
32 Analyst Rating
30 Buy
2 Hold
0 Sell
Strong Buy
Current: 129.620
Low
172.00
Averages
222.81
High
263.00
Current: 129.620
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.
SERVICENOW STOCK FALLS 11% FOLLOWING Q4 EARNINGS REPORT
- ServiceNow Shares Down: ServiceNow's shares have decreased by 11% following the release of their Q4 results.
- Impact of Q4 Results: The decline in share value reflects investor reactions to the company's financial performance in the fourth quarter.
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U.S. Stock Sentiment Declines as Tech Shares Plunge
- Market Sentiment Shift: The CNN Money Fear & Greed Index fell to 61.7 on Thursday, down from 64, indicating a cautious shift in market sentiment while still remaining in the 'Greed' zone, which could impact investor confidence and market liquidity.
- Tech Stock Struggles: Microsoft Corp. (NASDAQ:MSFT) shares plummeted nearly 10% on Thursday, marking its worst session since March 2020, primarily due to slowing cloud growth, reflecting concerns over future growth prospects in the tech sector.
- Economic Data Fluctuations: U.S. initial jobless claims decreased by 1,000 to 209,000, slightly above market expectations of 205,000, indicating labor market resilience; however, the trade deficit surged to $56.8 billion in November, potentially exerting pressure on economic recovery.
- Overall Market Trends: The Dow Jones closed up about 56 points at 49,071.56, while the S&P 500 fell 0.13% to 6,969.01 and the Nasdaq Composite dipped 0.72% to 23,685.12, showcasing a divergence in market performance, particularly with consumer discretionary and information technology sectors underperforming.
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