ServiceNow’s $4.2 Billion Buyback Arsenal Faces a Short-Seller Surge
Published on 04/30/2026 at 05:50 | Redaktion boerse-global.de
The disconnect at ServiceNow has rarely been starker. The software giant is pouring billions into its own stock, lifting its annual revenue forecast, and betting big on artificial intelligence — yet its shares have shed more than 40% this year, and short sellers are circling like never before.
Short interest in ServiceNow has surged to 38.95 million shares, a roughly 30% jump in April alone. The bearish bets come even as the company deploys its heaviest-ever share repurchase program. In the first quarter, ServiceNow bought back around 20 million of its own shares — more than double the total for all of last year — and still has $4.2 billion in remaining buyback authority.
A Brutal Quarter, Despite the Beat
The catalyst for the selloff was the April 23 earnings report. ServiceNow beat its own guidance across every key metric in the first quarter of 2026. Subscription revenue climbed 22% to $3.67 billion, while remaining performance obligations hit $27.7 billion, up 25% year over year. Total revenue reached $3.77 billion, a 22% gain.
Yet the stock cratered nearly 18% in a single day.
Should investors sell immediately? Or is it worth buying ServiceNow?
Management pointed to two specific headwinds. Delayed contract closures in the Middle East cost the company roughly 75 basis points of subscription revenue growth in the quarter — though several of those on-premise deals have since closed in the second quarter. Separately, the integration costs from the $7.75 billion Armis acquisition, which closed on April 20, are squeezing margins. The gross margin declined noticeably year over year, and CFO Gina Mastantuono expects a full normalization only in 2027.
AI Ambitions Trump the Near-Term Pain
CEO Bill McDermott used the earnings call to raise the company’s AI revenue target for 2026 from $1 billion to at least $1.5 billion — a 50% increase delivered ahead of the planned Financial Analyst Day on May 4. The number of customers spending $1 million or more on the Now Assist AI product grew more than 130% year over year. Half of net new business now comes from non-seat-based models such as token or infrastructure usage.
The AI push is also underpinned by an expanded partnership with Google Cloud to develop autonomous AI agents that solve IT problems for large enterprise clients.
Wall Street Splits, Institutions Pile In
Analyst reactions have been unusually fragmented. KeyBanc cut its price target to $85 on margin concerns. Needham slashed its target from $155 to $115 but kept a Buy rating. Citi lowered its target from $177 to $154. Barclays resumed coverage with a $132 target and an Overweight rating. BMO Capital reduced its target from $120 to $115 but maintained Outperform.
The broader consensus among 54 analysts points to a median price target of $140 — implying roughly 55% upside from current levels around $90. Forty-three analysts recommend buying the stock.
ServiceNow at a turning point? This analysis reveals what investors need to know now.
Meanwhile, institutional investors are moving in. The number of hedge fund portfolios holding ServiceNow positions rose to 118 at the end of the fourth quarter of 2025, up from 104 in the prior quarter, placing the company 25th among the most popular hedge fund holdings. Polen Capital, a growth-equity specialist, expanded its position in the first quarter of 2026, selling out of Adobe, Intuit, and Paycom to fund the move. In its investor letter, Polen argued that AI agents depend on mission-critical software — and that companies like ServiceNow will monetize those users just as they do human ones.
The Technical Picture
The stock is now trading near the $90 mark, with the next major resistance level at the 50-day moving average of roughly $105. A break above that threshold could shift the narrative back to the company’s operational momentum and AI partnerships. With $4.2 billion in buyback firepower still available, management has ample capacity to support the stock at current levels.
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ServiceNow Stock: New Analysis - 30 April
Fresh ServiceNow information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
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