Shares of ServiceNow (NOW 5.79%) were pulling back today, once again as part of a broader sell-off in the software industry in response to a new product from Anthropic, showing that the AI threat is alive and well.
As of 12:08 p.m. ET, ServiceNow stock was down 4.4%, while the iShares Expanded Tech-Software ETF (IGV 4.21%), which tracks the software-as-a-service (SaaS) sector, was down 4%.
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Anthropic comes after remote work
Yesterday, Anthropic announced a new feature for its Claude AI chatbot, saying that Claude can now use a computer remotely after being prompted from a smartphone. The AI can do things like open apps, use a web browser, and fill in spreadsheets.
It's the latest example of AI agents getting more productive and potentially disruptive to existing software companies.
NYSE: NOW
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What it means for ServiceNow
ServiceNow is one of several software stocks that has fallen sharply over the last year as worries about AI disruption mount. ServiceNow is down nearly 60% from its peak in Dec. 2024 as pressure on its valuation, along with the AI threat, has weighed on the stock.
There's been little evidence in the company's performance that it's experiencing any kind of disruption, but over the longer term the rise of AI is likely to introduce new competition to ServiceNow and its software peers, changing the industry. There is at least anecdotal evidence of businesses "vibecoding" alternatives to traditional enterprise software programs.
Even after the pullback, ServiceNow is still expensive at a price-to-earnings ratio of 63 on a generally accepted accounting principles (GAAP) basis. Anthropic and its peers, meanwhile, are likely to continue to make progress on new AI tools, so it will be difficult for the narrative around AI disruption is unlikely to go away.
If ServiceNow continues to deliver solid results, however, the stock should eventually be rewarded.
