ServiceNow's AI Alliances Are Impressive. The cRPO Line Is What Pays the Bills.

ServiceNow spent the week announcing new partners, including OpenAI and Google Cloud, as well as a new group of companies working together. But during the same week, investors pushed its share price down. This shows the company's main problem: its plans and partnerships for AI are becoming more impressive, but the financial results are not yet providing enough proof that these plans will pay off.

Shares fell 3.2% that day. This continued a decline that began after the company reported its third-quarter results on Wednesday and gave a cautious forecast for future growth. Reuters reported on Thursday that software company shares fell more broadly after results from ServiceNow and Fortinet. Investors were also worried again that AI could replace some of the software products that established companies already sell. In other words, investors are no longer satisfied with hearing about new AI features. They want to see how those features make money.

Many new partnerships, but results may take time

This week's announcements looked important on paper. ServiceNow expanded its partnership with OpenAI. The new plans include connecting ChatGPT to ServiceNow workflows with built-in controls through Action Fabric. They also include planned connections for cybersecurity, Codex, and voice controls. OpenAI also plans to use ServiceNow across its own workforce. This partnership benefits both sides: ServiceNow gets a well-known partner, and OpenAI also becomes a customer.

Google Cloud was also involved. On Tuesday, the companies announced a larger partnership that connects ServiceNow's industry solutions with Gemini Enterprise. The work will cover telecommunications, retail, sales, and IT. Then, on Wednesday, companies announced the Control Tower Alliance. Its founding members include Anthropic, AWS, Cisco, NVIDIA, OpenAI, and Stripe. The group aims to bring together useful connections between products and solutions that have already been tested. These tools are intended to help businesses control how they use AI.

The timing is important. Some of the OpenAI features are not expected until 2027. That means they are a possible source of future growth, not a product line that is already bringing in money. Announcing a feature or saying that a company plans to use it does not mean that the revenue has been earned. This wait can be even longer when features are not due to arrive for several years.

The numbers behind investor concerns

Wednesday's results help explain why investors are not giving ServiceNow credit for its future plans yet. Subscription revenue in the third quarter of 2026 was $3,988 million. This was 21% higher than in the same quarter a year earlier. The company is still growing. Its business is not shrinking.

But the profit result was weaker. Adjusted earnings per share were just $1.00, compared with the $1.02 that analysts expected. Reuters reported on Thursday that the company's quarterly profit was below estimates.

An even more important warning came from the company's contracted short-term revenue. This is measured by cRPO, which tracks contracted revenue expected to be recognized over the next 12 months. cRPO was $13.65 billion in the third quarter, up 20.5%. For the final quarter of the year, ServiceNow expects growth of 18.5%. Both things can be true at the same time: the company is still growing, but the growth rate of one of its most closely watched measures is slowing down. Investors are especially concerned about this because they fear AI could make existing software less valuable. The slowdown does not prove that ServiceNow's strategy is wrong, but it means the company must do more to show that it can deliver on its plans.

How analysts changed their forecasts

According to media reports, BMO Capital lowered its price target on Thursday from $165 to $155. The firm said that cRPO growth and the company's related forecast were both about 50 basis points below its expectations. It kept its positive rating on the stock. Many other analysts also lowered their price targets after the results. They pointed to the weaker cRPO growth and forecast. However, some firms took the opposite view. Not all analysts were negative, but the main focus clearly shifted to how strong and reliable the company's growth really is.

There is also some good news. ServiceNow raised its full-year 2026 forecast for subscription revenue to between $15,780 million and $15,790 million. It also expects a free cash flow margin of 36%. A cautious forecast for near-term growth combined with higher targets for the full year does not suggest that customer demand is disappearing.

The question that will decide the stock's future

What investors really want to know is whether AI will make ServiceNow easier for other companies to replace, or whether it will make ServiceNow more important because businesses need to control how AI is used. The new partnerships support the second possibility, but they do not prove it. Working more closely with other technology companies does not automatically bring in more customers or make existing customers adopt new products faster. The announced features must produce real financial benefits before investors can count them as a success.

The next earnings report will provide an important test. It must show how the business performed in the fourth quarter and whether ServiceNow can still meet its full-year targets. The OpenAI features planned for 2027 will provide another test later.

For now, the debate about ServiceNow shares is not simply about whether the company will win or lose in AI. It is about the gap between its promises for the future and the financial results investors want to see today. The cRPO figures, rather than the list of new partners, will show whether that gap is getting smaller or larger.