ServiceNow Shares Slip Despite Strong AI Growth. Should Investors Buy the Dip on the Stock?

Core Viewpoint - The software-as-a-service (SaaS) sector is currently facing significant challenges, with ServiceNow's stock declining despite strong fourth-quarter results and positive guidance [1] Group 1: Company Performance - ServiceNow reported a 20.5% year-over-year revenue increase to $3.57 billion for Q4, with adjusted earnings per share (EPS) rising 26% to $0.92, surpassing analyst expectations [3] - Subscription revenue grew by 21% year over year to $3.47 billion, while professional services revenue increased by 13% to $102 million [3] - Remaining performance obligations (RPO) rose by 26.5% to $28.2 billion, with current RPO (cRPO) increasing by 25% to $12.85 billion [4] Group 2: Future Outlook - The company forecasts Q1 subscription revenue growth of 21.5%, estimating a range of $3.650 billion to $3.655 billion, and anticipates cRPO to increase by 22.5% [5] - For the full year, ServiceNow projects subscription revenue between $15.53 billion and $15.57 billion, indicating growth of 20.5% to 21% [5] Group 3: Strategic Initiatives - ServiceNow is transitioning to an AI-first company, with its generative AI suite, Now Assist, achieving a $600 million annual contract value (ACV) and aiming for over $1 billion by the end of 2026 [2] - The company is acquiring AI cybersecurity firms Armis and Veza to integrate security and AI capabilities, and is developing its AI Control Tower platform to serve as an orchestration platform for agentic AI [2][6]