ServiceNow Inc (NYSE:NOW) shares are rebounding Tuesday. The stock is bouncing back from Monday’s sell‑off sparked by a Citrini Research report warning that AI could pose major risks to software companies and the broader global economy.
ServiceNow is rebounding after software stocks slid on Monday following a Citrini Research note that suggested AI could fundamentally disrupt the enterprise‑software business model. The pullback also came during a broader market dip, adding extra pressure to the sector.
Today's move higher suggests investors may see yesterday's sell‑off as overdone, or that improving market sentiment — the Nasdaq up 1.12% and the S&P 500 gaining 0.71% — is helping lift software names despite the long‑term concerns Citrini highlighted.
Citrini Research argues that AI is creating a powerful feedback loop: companies use AI to cut labor costs, then reinvest those savings into more AI, accelerating the very disruption that caused the cuts.
For years, SaaS companies benefited from sticky recurring revenue and high switching costs. But agentic coding tools like Claude and Codex are rapidly eroding those advantages. According to the report, a "competent developer" using these tools could recreate the core features of a mid‑market SaaS product in just weeks.
Citrini points to a case where a Fortune 500 company renewed a major SaaS deal at a 30% discount after weighing whether to replace the vendor with AI tools built in‑house. It's a worrying sign for software providers whose business models depend heavily on pricing power and recurring subscription revenue.
Analysts have recently maintained a positive stance on ServiceNow, with Needham reiterating a Buy rating twice in February and setting a price target of $155.00. Citigroup has also maintained its Buy rating, raising the price target from $235.00 to $237.00 on Jan. 30.
However, not all analysts are as bullish. Macquarie maintained a Neutral stance on Jan. 29, lowering the target price significantly from $172.00 to $140.00. On the same day, DA Davidson held its Buy rating but set a lower target price of $220.00.
NOW Price Action: ServiceNow shares were up 1.85% at $102.66 at the time of publication on Tuesday. The stock is near its 52-week low of $98.00, according to Benzinga Pro.
Image: JarTee/Shutterstock
| Sep-18 | |
| Sep-17 | |
| Sep-17 | |
| Sep-16 | |
| Sep-15 | |
| Sep-15 | |
| Sep-15 | |
| Sep-14 | |
| Sep-14 | |
| Sep-14 | |
| Sep-14 | |
| Sep-14 | |
| Sep-14 | |
| Sep-11 | |
| Sep-11 |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, alerts, and much more.
Learn more about Finviz Elite