AI Jitters Hit Software Stocks After IBM, ServiceNow

On April 24, 2026, quarterly updates from IBM and ServiceNow prompted a broad decline across software and cloud stocks. IBM shares fell about 10% after it reported slower first-quarter revenue growth, citing weakness in its software business. ServiceNow also traded lower after flagging delayed deals in the Middle East linked to the Iran conflict, which it said would weigh on subscription revenue growth.

ServiceNow further indicated that its recent investments in artificial intelligence are expected to pressure margins in the near term. These disclosures led investors to reassess growth and profitability expectations across the software universe, extending selling pressure beyond the two companies that reported results.

The reaction was framed as thematic rather than strictly fundamental to IBM or ServiceNow. The reports intensified an ongoing debate over whether AI tools could reduce demand for traditional software or alter existing license and pricing models.

Following IBM and ServiceNow’s results, multiple reports highlighted a sector-wide move lower in software stocks. Articles covering companies such as RingCentral, Five9, DocuSign (DOCU), PubMatic, Sprinklr, Rapid7, nCino, and Intuit (INTU) all cited the same catalyst: renewed questions about AI’s impact on the software sector and business models.

Investors have been focused on risks that AI-enabled automation might compress per-seat usage or otherwise change how enterprises pay for software. Earlier, a UBS downgrade of ServiceNow had already stoked worries about "seat compression," where AI reduces the number of human users needed for traditional enterprise tools, pressuring revenue for established vendors.

The latest disappointment from a company previously seen as relatively AI-resilient, ServiceNow, was described as weakening the notion of "safe SaaS" names. Some analysts responded by lowering estimates, reinforcing caution toward the group.

Alarm.com shares fell 6.3% in the afternoon session, with the drop tied to the same IBM and ServiceNow-related concerns about AI’s effect on software demand. The company’s stock has not been highly volatile historically, with only five moves greater than 5% over the last year, so the decline signaled that investors viewed the news as meaningful.

Procore Technologies slid 7.2% on the day. The construction management software provider is described as quite volatile, having seen 17 moves greater than 5% over the past year. The latest decline was again linked to the sector-wide AI debate rather than company-specific news.

Upland Software dropped 7.1%. Its shares are characterized as extremely volatile, with 53 moves greater than 5% over the last year. Reports noted that the move reflected market concerns around AI’s implications but was not seen as fundamentally changing perceptions of the business.

Other names cited as affected included Bentley Systems, BILL, Autodesk (ADSK), PagerDuty, PubMatic, Sprinklr, Rapid7, nCino, Qualys, Q2 Holdings, RingCentral, Five9, DocuSign (DOCU), Freshworks, and Q2 Holdings, where declines were also attributed to the AI-related sector sentiment.

Several articles placed the day’s declines in the context of year-to-date performance and historical volatility. PagerDuty, for example, is down 49.9% since the beginning of the year and trades 63.9% below its 52-week high of $17.17 from September 2025. Qualys is down 36.8% year-to-date and 46.2% below its 52-week high of $153.80 from November 2025.

Alarm.com is down 15.9% since the start of the year and trades 29% under its 52-week high of $60.68 from May 2025. Q2 Holdings had previously rallied on stronger-than-expected third-quarter 2025 results and improved profitability, underscoring the contrast with the current sentiment-driven weakness.

In multiple cases, commentary suggested that stock market reactions can be exaggerated and that large price drops may create opportunities to buy high-quality stocks. However, these observations were presented as general remarks rather than company-specific recommendations.

Separate from the IBM and ServiceNow-driven selloff, Oracle (ORCL) shares fell 4.5% after reports that the company canceled a significant server-rack order from key supplier Super Micro Computer (SMCI). A Bluefin Research note estimated the scrapped order at 300 to 400 racks, valued between $1.05 billion and $1.4 billion.

The report added to existing investor concerns over the costs and profitability of Oracle’s (ORCL) AI infrastructure build-out. Morgan Stanley (MS) recently reduced its price target on Oracle, citing uncertainties about the cost and margin profile of its expanding GPU-as-a-service business.

The stock also faces broader market caution related to its substantial capital spending, a class-action lawsuit alleging it misled investors about its AI strategy, and competitive pressures. Oracle shares are down 8.9% year-to-date and trade 45.7% below their 52-week high of $328.33 from September 2025.

Despite recent weakness, Oracle’s longer-term performance remains positive, with a hypothetical $1,000 investment five years ago now worth $2,379, according to the report.