ServiceNow's stock tumbled 6% in after-hours trading Wednesday despite crushing Wall Street's fourth-quarter expectations, as investors digested the enterprise software giant's aggressive AI partnership strategy. The company announced an expanded deal with Anthropic just days after inking a three-year pact with OpenAI, signaling a dramatic shift in how it's positioning itself as an "AI control tower" for businesses. The market's lukewarm response comes even as the company beat estimates on both revenue and earnings while authorizing another $5 billion in share buybacks.
ServiceNow just delivered a quarter that would make most software companies pop champagne, but Wall Street isn't buying the celebration. The enterprise software giant posted fourth-quarter revenue of $3.57 billion on Wednesday, beating the $3.53 billion consensus and marking a solid 20.5% jump from last year's $2.96 billion. Adjusted earnings hit 92 cents per share, topping the 88-cent estimate. Yet shares dropped more than 6% in after-hours trading as investors parsed through the company's increasingly complex AI strategy.
The stock reaction tells a more nuanced story than the headline numbers suggest. While ServiceNow crushed expectations, the company's recent deal-making frenzy has some analysts wondering if the traditional software playbook is hitting its limits in the age of AI. Within a single week, the company announced expanded partnerships with both Anthropic and OpenAI, effectively hedging its bets across the two hottest names in generative AI.
The Anthropic partnership, revealed Wednesday, will deeply integrate Claude models into ServiceNow's enterprise platform. But that announcement came barely a week after ServiceNow inked a three-year deal with OpenAI for similar capabilities. It's an unusual dual-vendor strategy that positions ServiceNow as Switzerland in the increasingly heated AI model wars - but also raises questions about focus and integration complexity.
