ServiceNow's stock experienced a significant pre-market plunge of 8.66% on Tuesday, reflecting a sharp downturn for the software company.

The selloff was part of a broader decline across the software sector, triggered by International Business Machines' (IBM) preliminary second-quarter estimates. IBM's CEO indicated that clients shifted their capital expenditure toward servers, storage, and memory purchases in late June to secure supply-constrained infrastructure ahead of expected price increases. This shift in spending has reignited market fears that newer AI models could disrupt the traditional business models of software companies, leading to a sector-wide downturn.