--- title: "ServiceNow falls 27%, its worst day ever, as Gartner finds 97% of companies can't turn AI into savings" description: "ServiceNow fell 27% on October 29 after its results revived AI-disruption fears, and Gartner's buyer-side research, reported a day earlier, had already put numbers on the doubt: 97% of organizations cannot turn AI productivity into cost cuts, yet 85% plan to spend more next year. The savings are late because the freed hours keep being spent the old way." publisher: "The Inference" section: "Platforms" published: 2026-10-29T20:05:24.857Z modified: 2026-10-29T20:05:24.857Z canonical: https://theinference.org/article/servicenow-falls-27-its-worst-day-ever-as-gartner-finds-97-of-companies-can-t-turn-ai-into-savings language: en keywords: "ServiceNow, Earnings, Enterprise Software, AI Productivity" --- # ServiceNow falls 27%, its worst day ever, as Gartner finds 97% of companies can't turn AI into savings > ServiceNow fell 27% on October 29 after its results revived AI-disruption fears, and Gartner's buyer-side research, reported a day earlier, had already put numbers on the doubt: 97% of organizations cannot turn AI productivity into cost cuts, yet 85% plan to spend more next year. The savings are late because the freed hours keep being spent the old way. [ServiceNow](https://theinference.org/markets/companies/servicenow), the enterprise-software company, sank 27% on Thursday, its worst trading day ever, after [third-quarter results](https://www.cnbc.com/2026/10/29/servicenow-now-earnings-q3-2026.html) revived fears that AI will upend the software business [2]. A day before the fall, [Gartner](https://theinference.org/markets/companies/gartner), the technology-research firm, had put numbers on the buyers' side of the same doubt: organizations are creating free time with AI and failing to spend it differently [1][3]. The bottleneck has moved from what the model can do to how work is organized around it. ## Boards expect savings, and the budgets rise anyway Three in four board members expect a productivity-and-savings return on their company's AI spend, Gartner finds, and 97% of organizations cannot cut expenses through productivity measures alone [1][3]. "Ultimately, organizations will not generate cost savings from AI at this point," said CV Viverito, a senior director analyst in Gartner's HR practice [1]. Thirty-eight percent of companies are already over budget on AI [1]. Eighty-five percent plan to spend even more next year [1]. About 95% of the AI-productivity talk on corporate earnings calls concerns future gains rather than results [1]. *Chart: **97% cannot turn AI productivity into cost cuts, yet 85% will spend more next year** Bar chart of Gartner survey findings: 97% of organizations cannot cut expenses through AI productivity alone, 85% plan to spend more on AI next year, 75% of board members expect a productivity and savings return, and 38% are already over budget on AI.* *Share of organizations and board members in Gartner's buyer-side research, reported October 28 and 29, 2026. Sources: HR Dive via Yahoo Finance; TechRadar via Yahoo Tech. [1][3]* ## The freed time goes back where it came from The failure has a mechanism. In [a Gartner survey of more than 1,800 employees](https://finance.yahoo.com/technology/ai/articles/companies-not-saving-money-ai-175600832.html), just 21% of the time AI saved was redirected into more innovative work [1]. Creating capacity is not the struggle, Viverito said; what organizations struggle with is making that capacity usable and pointing it at something valuable [1]. The freed hours flow back into the same work. ## ServiceNow's accounting records the missing work The quarter was not the problem: revenue matched estimates, net new AI contract value grew 65%, and the company raised its full-year AI target to $1.7 billion [2][4]. What broke the stock was the wait. [Fourth-quarter contracted-revenue growth was guided at 18.5%](https://247wallst.com/investing/2026/10/29/servicenow-tumbles-19-as-slower-contract-growth-overshadows-raised-ai-target-salesforce-slides-6-workday-drops-5/), below the third quarter's pace and Wall Street's estimate, and [Citi](https://theinference.org/markets/companies/citigroup) analyst Tyler Radke said investors wanted a sooner payoff from ServiceNow's forward-deployed engineers, who embed inside customers to build AI solutions [2][4][5]. ## Deployment help lands in services, and returns at renewal The missing work shows up in the accounting: deployment help on large AI deals is booked as services rather than subscription revenue, President and Chief Financial Officer [Gina Mastantuono](https://theinference.org/markets/people/gina-mastantuono) said, and returns to subscription when those contracts renew [6]. [Salesforce](https://theinference.org/markets/companies/salesforce) and [Workday](https://theinference.org/markets/companies/workday) fell with it [4]; we tracked this doubt into the AI cloud names on October 14, and the buyers' own survey is the new evidence [1]. *Chart: **Three years of roughly 20% growth, then the worst day in ServiceNow's history** Line chart of ServiceNow quarterly total revenue from Q3 2023 to Q3 2026, rising steadily from about $2.3 billion to about $4.1 billion.* *Total revenue, USD billions, by fiscal quarter. Q3 2026 reported after the close on October 28, 2026; earlier quarters from ServiceNow's SEC filings. [2][4][7]* ## Watch the 2027 renewals, and start the redesign now The same chain has run further inside ServiceNow: its internal use of AI now generates more than $1 billion in annualized value, more than double the level at the end of 2025, Mastantuono [said on the call](https://finance.yahoo.com/markets/stocks/articles/servicenow-now-q3-2026-earnings-054403139.html) [6]. That is what capture looks like after the work is rebuilt around the tool. The date to watch is 2027, when deployment-heavy contracts renew and the services drag returns to subscription growth [4][6]. Brian Schwartz, an analyst at the brokerage Oppenheimer who recommends buying the dip, conceded the AI momentum "counters a disruption thesis" without establishing a path to reacceleration [5]. For the buyers holding the bill, the move is concrete: pick work you understand, put AI on it, and rebuild the work around the hours it frees. ## Takeaway AI is freeing hours faster than companies rebuild the work to spend them, so the savings lag; ServiceNow's worst day ever prices that wait, and its 2027 renewals are the test. ## Sources 1. [HR Dive via Yahoo Finance, 'Companies are not saving money with AI, Gartner finds', 29 October 2026](https://finance.yahoo.com/technology/ai/articles/companies-not-saving-money-ai-175600832.html) 2. [CNBC, 'ServiceNow shares plunge 27% after earnings revive AI disruption fears', 29 October 2026](https://www.cnbc.com/2026/10/29/servicenow-now-earnings-q3-2026.html) 3. [TechRadar via Yahoo Tech, 'Gartner report finds just 3% of organizations say they've hit productivity and savings goals from using AI', 28 October 2026](https://tech.yahoo.com/ai/articles/gartner-report-finds-just-3-140500339.html) 4. [24/7 Wall St, 'ServiceNow Tumbles 19% as Slower Contract Growth Overshadows Raised AI Target; Salesforce Slides 6%, Workday Drops 5%', 29 October 2026](https://247wallst.com/investing/2026/10/29/servicenow-tumbles-19-as-slower-contract-growth-overshadows-raised-ai-target-salesforce-slides-6-workday-drops-5/) 5. [Yahoo Finance, 'ServiceNow, Fortinet Q3 earnings reports lead software stocks lower as outlooks disappoint', 29 October 2026](https://finance.yahoo.com/markets/stocks/article/fortinet-drags-down-cybersecurity-stocks-as-the-companys-service-revenue-forecast-misses-estimates-124146969.html) 6. [ServiceNow Q3 2026 earnings call transcript, The Motley Fool via Yahoo Finance, 29 October 2026](https://finance.yahoo.com/markets/stocks/articles/servicenow-now-q3-2026-earnings-054403139.html) 7. [ServiceNow, quarterly figures from its SEC filings, retrieved 29 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001373715) --- ServiceNow falls 27%, its worst day ever, as Gartner finds 97% of companies can't turn AI into savings — The Inference. Canonical: https://theinference.org/article/servicenow-falls-27-its-worst-day-ever-as-gartner-finds-97-of-companies-can-t-turn-ai-into-savings