SAP stock drops after ServiceNow, Fortinet results weigh

SAP shares fell nearly 2% in premarket trading Thursday following disappointing results from software peers ServiceNow and Fortinet, which intensified concerns about artificial intelligence disruption in the sector.

Software companies have faced heightened scrutiny this year as investors assess the potential for newer AI models to disrupt traditional business models. 

Fortinet dropped 27% in the premarket trade, making it the top decliner on Wall Street’s benchmark index. The cybersecurity company raised its annual results expectations, but analysts highlighted decelerating revenue growth in its services unit, reflecting high expectations for a stock that has rallied 119% this year.

ServiceNow slid more than 18% after a third-quarter profit miss overshadowed a raised full-year subscription revenue and cash flow margin outlook.

Several brokerages lowered price targets on both stocks, citing concerns including decelerating revenue growth in Fortinet’s services unit and lagging subscription revenue and backlog growth for ServiceNow, while AI initiatives have yet to materialize.

"Both beat and raise, but Q4 guides seen as very underwhelming," Berenberg analyst Nay Soe Naing commented.