Software company soars amid plans to cut 1,000 jobs

ServiceNow (NOW) plans to cut up to 1,000 jobs, and its banal went up connected the news.

That absorption amazed galore people, fixed that layoffs usually awesome trouble. Yet NOW's banal terms climbed toward $111 aft the program surfaced, up astir 9% implicit 5 trading sessions.

The banal had fallen much than 24% year-to-date earlier the rally due to the fact that investors had spent months disquieted that AI would devour into the bundle ServiceNow sells.

The occupation cuts, paired with a beardown second-quarter report, straight pushed backmost against that fear.

So the question for investors holding oregon considering buying ServiceNow is simple. Why did cutting jobs marque this banal much attractive?

Why ServiceNow cutting 1,000 jobs pushed NOW banal higher

The cuts adjacent about 3% of ServiceNow's planetary workforce, Investing.com reported aft speaking with radical acquainted with the plan.

Investors work the determination arsenic a motion of discipline, not distress. ServiceNow is shrinking overlapping roles portion its gross continues to turn by more than 20% a year.

Wall Street appears to judge the determination shows a institution tin assistance margins without slowing its apical line, which matters astir to investors, fixed their absorption connected aboriginal nett growth.

The timing helped too. The cuts landed close aft an net study that galore investors had treated arsenic a make-or-break test.

What ServiceNow's second-quarter net told investors

ServiceNow reported second-quarter gross of $3.99 billion, up 24% from a twelvemonth earlier, according to Investing.com. That bushed the roughly $3.93 billion analysts expected.

Adjusted net came successful astatine $0.90 a share, supra the $0.86 forecast. The institution besides raised its full-year subscription gross outlook.

More ServiceNow Coverage:

• Bank of America spots ServiceNow's overlooked AI advantage

• Goldman says ServiceNow is penning a wholly caller playbook

• CLSA gives ServiceNow a bearish telephone earlier its net report

The fig that drew the astir attraction was AI. ServiceNow's AI portfolio crossed $1 cardinal successful yearly declaration value for the archetypal time.

Annual declaration worth measures the yearly gross locked into signed lawsuit deals. Crossing $1 cardinal showed that customers are paying existent wealth for ServiceNow's AI tools, not conscionable investigating them.

That azygous fig undercut the biggest carnivore statement against the stock.

ServiceNow is reshaping its workforce astir AI arsenic its banal recovers from a steep 2026 slide.JHVEPhoto / Getty Images

How the AI fearfulness had dragged NOW down each twelvemonth

For astir of 2026, investors feared that AI agents would fto companies automate their ain workflows and halt paying for bundle similar ServiceNow's.

That interest deed the full sector. Salesforce and different endeavor names fell sharply connected the aforesaid logic.