ServiceNow Plunges 2.86%: Is AI-Driven Cost-Cutting a Double-Edged Sword?

Summary
• BMO Capital upgrades ServiceNow to Buy with $1,160 target
• Google secures $1.2B cloud deal with ServiceNow
• Corporate insiders sell 6,003 shares in 90 days
• Price tumbles from $1,001 high to $964.08 low amid mixed analyst sentiment

ServiceNow's stock tumbled over 2.85% in a volatile session, trading at $967.73 as of 3:58 PM. The selloff coincided with a $1.2 billion cloud contract with Google and conflicting analyst ratings—from Bank of America’s Buy to KeyBanc’s Hold. While AI-driven cost-cutting promises $100M in savings, insider selling and margin concerns cloud investor optimism.

AI Savings and Insider Selling Create a Perfect Storm
ServiceNow’s 2.85% decline reflects a tug-of-war between bullish and bearish catalysts. The $1.2 billion Google cloud deal—a strategic win in hybrid cloud infrastructure—failed to offset investor skepticism. Corporate insiders sold 6,003 shares worth $6M in 90 days, signaling caution. Meanwhile, CFO Gina Mastantuono’s admission of prudence in absorbing margin pressures from Moveworks’ acquisition added uncertainty. The stock’s breakdown below the 200-day MA ($976.12) and 38.3 RSI in oversold territory amplified the sell-off.

Software Sector Mixed as Microsoft Gains Momentum
Options Playbook for Volatile Conditions
• 200-day MA: $976.12 (below current price)
• RSI: 38.3 (oversold)
• Bollinger Bands: Price at $967.73 (near lower band at $923.79)
• MACD: -8.85 (negative momentum)
• OEF ETF (bold) up 0.26%

The technical landscape suggests a potential rebound from oversold RSI levels, but the 200-day MA and Bollinger lower band remain critical. The iShares S&P 100 ETF (bold) shows defensive strength, but NOW’s volatility demands options-based strategies.

Top Options:
• NOW20250801C960 (Call):
- Strike: $960 | Expiry: 2025-08-01 | IV: 25.63% | Delta: 0.595 | Theta: -3.97 | Gamma: 0.0106 | Turnover: $34,605
- IV: moderate | Delta: strong directional bias | Theta: high decay | Gamma: responsive to price swings
delta, ideal for a modest rebound. Payoff: $101.73 (5% downside from $967.73) = $11.73.
• NOW20250801C967.5 (Call):
- Strike: $967.5 | Expiry: 2025-08-01 | IV: 27.12% | Delta: 0.514 | Theta: -3.64 | Gamma: 0.0103 | Turnover: $170,714

Aggressive bulls may consider NOW20250801C960 into a bounce above $960. If $967.73 holds, NOW20250801C967.5 offers leverage on a rebound.

Backtest ServiceNow Stock Performance
The performance of NOW after an intraday plunge of -3% shows favorable short-to-medium-term performance. The backtest indicates a generally positive response with win rates and returns suggesting stability following the decline.1. Technical Support Levels: Immediate focus should be on key support levels such as $0.6158 (200-day MA) and $0.4603. A breakdown below $0.6158 could accelerate the decline toward the 52-week low.2. Sector Peers Performance: Sector peers like Coca-Cola (KO) trading up 0.08% highlight NOW’s underperformance during this period.3. Market Sentiment: The broader market sentiment and news surrounding NOW’s sector peers do not indicate any direct catalysts for the stock’s collapse.

Now Is the Time to Watch $960 Support and Microsoft’s Lead
ServiceNow’s short-term trajectory hinges on whether $960 (200-day MA) holds and whether the Google cloud deal translates to sustained revenue. The oversold RSI (38.3) and negative MACD (-8.85) suggest potential for a bounce, but insider selling and Moveworks integration risks persist. Investors should monitor Microsoft’s 0.54% intraday gain for sector sentiment. A decisive break below $960 could trigger deeper selling; above it, the 200-day MA ($976.12) becomes a key resistance. For now, the path of least resistance is sideways to lower, but the 2025-08-01 options chain offers tools to capitalize on volatility.