Software giant ServiceNow reported better-than-expected quarterly results and sales guidance, yet this failed to alleviate investor anxieties that artificial intelligence could disrupt its business model, with its stock continuing its decline in after-hours trading. In the recently concluded fourth quarter, ServiceNow's subscription revenue grew by 21% to $3.47 billion; adjusted earnings per share were 92 cents, with both figures surpassing Wall Street expectations. As of December 31, the number of customers with annual contract values exceeding $5 million increased to 603 from 553 in the previous quarter, indicating steady expansion among its large client base. The company anticipates subscription revenue for the current quarter to be approximately $3.65 billion, exceeding analyst forecasts. Furthermore, a key metric for near-term bookings—current remaining performance obligation (cRPO)—is projected to grow by nearly 23% this quarter, a pace also faster than anticipated. However, the positive earnings news failed to boost market sentiment, and its stock fell about 6% in after-hours trading. Previously, ServiceNow's share price had plummeted 45% over the past 12 months, a decline far steeper than many of its tech peers. This sell-off highlights intense market skepticism regarding the prospects of traditional application software leaders, with investors worried that generative AI will reshape the industry landscape, thereby weakening the market positions of established giants like ServiceNow, Salesforce, and Adobe. Faced with market doubts, ServiceNow Chief Executive Officer Bill McDermott vigorously defended the company's AI strategy. He emphasized that ServiceNow is not merely an application vendor with some added AI features but is a critical platform for enterprises to apply AI in their operations. He revealed that the company's primary generative AI product, Now Assist, is performing above expectations, with its annual contract value surpassing $600 million by the end of December. To enhance its AI capabilities, ServiceNow allows customers to use most major AI models within its tools. On Wednesday, the company announced an expanded relationship with Anthropic PBC to provide greater access to its Claude models. The prior week, ServiceNow also disclosed a three-year agreement aimed at strengthening its ties with OpenAI. Beyond organic growth, ServiceNow is also seeking expansion through large-scale acquisitions. Last month, the company announced its largest-ever acquisition: a $7.75 billion deal to purchase cybersecurity startup Armis, expected to close in the second half of this year. Addressing external speculation that the acquisition was driven by "necessity," McDermott denied this, stating it was for expanding into new markets. He indicated that following the Armis acquisition, the company believes there are no other major market gaps that must be filled. Concurrently, the company's board announced an additional $5 billion stock repurchase program, primarily intended to manage dilution effects. The company had announced its first-ever repurchase plan in May 2023, which was extended in early 2025. Despite management's attempts to rebuild confidence through strong performance and strategic expansion, long-term concerns about technological disruption continue to dominate market sentiment. RBC Capital Markets analyst Matthew Hedberg pointed out that while the earnings and guidance largely met or even exceeded expectations, the stock decline is surprising, reflecting a deep divergence in current market logic regarding software industry valuations.