TLDR
- ServiceNow stock fell nearly 8% Tuesday, trading around $102.40
- The drop came in sympathy with IBM after IBM posted disappointing preliminary Q2 results
- IBM reported Q2 revenue of $17.2 billion, missing the $17.86 billion consensus estimate
- UBS raised its price target on NOW to $115 from $100 but kept a Neutral rating ahead of July 22 earnings
- ServiceNow’s YTD performance is down 27.37%, with its market cap sitting at $111.1 billion
ServiceNow (NOW) was trading around $102.40 Tuesday, down roughly 8%, after IBM’s weak preliminary Q2 numbers rattled investor confidence across enterprise software names.
IBM reported preliminary Q2 revenue of $17.2 billion, up 1% year-over-year but well below the $17.86 billion analyst consensus. CEO Arvind Krishna called the results “disappointing” in a letter to investors. Adjusted EPS came in at $2.93, missing the $3.022 estimate. GAAP diluted EPS fell 2% year-over-year to $2.27.
Krishna pointed to weaker-than-expected performance in IBM’s Z mainframe business as the main driver of the shortfall. Clients shifted capital spending toward servers, storage, and memory in the final weeks of June to lock in supply ahead of expected price increases — causing several large deals to miss IBM’s closing timelines.
ServiceNow and IBM announced an expanded partnership just last week to modernize enterprise systems and unlock data for AI at scale. That close relationship made NOW more sensitive to the IBM miss, and the market repriced accordingly.
UBS Keeps Its Cautious Stance
UBS raised its price target on ServiceNow to $115 from $100, but kept its Neutral rating on the stock. Investors read the move as a technical adjustment rather than a genuine bullish call.
The broker cited stable demand but flagged limited near-term AI momentum. The early-stage nature of ServiceNow’s AI partnership with Hitachi was noted as promising but not yet driving the kind of aggressive adoption that would support a more optimistic outlook.
The cautious tone ahead of the July 22 earnings report added to the pressure. Options markets showed elevated volatility and increased call interest, but that wasn’t enough to offset the negative sentiment from both the IBM news and the UBS commentary.
What to Watch Before July 22
ServiceNow carries strong profit margins and healthy free cash flow, which gives it room to keep investing in AI and new products even if economic conditions soften. Its high renewal rates and recurring contract base also provide good revenue visibility.
That said, growth has started to cool. To hit targets, the company needs to either pull more revenue from existing customers or pursue acquisitions — both of which carry risks around margins and integration.
NOW is down 27.37% year-to-date, with a market cap of $111.1 billion. Earnings are due July 22.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
