IBM, ServiceNow results fuel fears AI could disrupt software growth

AI is no longer being priced as a clean growth story for enterprise software. IBM shares dropped 10.3 percent after first-quarter revenue growth slowed, and ServiceNow added to the selloff when its results reignited the question now hanging over every workflow platform: if AI can do more coordination work, how much software does a buyer still need to pay for?

The market reaction was sharper than a simple earnings miss. Software stocks fell in premarket trading as investors widened the divide between companies that can prove AI lifts productivity and those that may see AI compress demand or pricing. IBM said its first quarter was a strong start to the year with broad-based revenue growth and double-digit software and infrastructure growth, but traders focused on the slowdown in software growth. ServiceNow, meanwhile, said first-quarter subscription revenue was hit by delays in Middle East deals tied to the Iran conflict, a reminder that geopolitics still shapes enterprise buying decisions even in an AI-driven quarter.

For monday.com, the message is clear: every AI feature now has to justify itself against both a standalone model and a cheaper point solution. The old enterprise-software pitch was simple, buy the platform, standardize the workflow, and expand over time. The new test is harder. Buyers want to know whether an AI layer actually saves time, reduces context switching, and keeps work governed at scale, or whether it just adds another tab to manage.

monday.com has been leaning hard into the stronger answer. The company says more than 250,000 customers worldwide use its platform, and that every product runs on the same AI layer so the software can both assist and execute work. In February, monday.com said it was welcoming AI agents to the platform with dedicated onboarding and infrastructure. In March, it launched Agentalent.ai, a managed marketplace for enterprises to discover, evaluate and hire AI agents for defined business roles, built with AWS, Anthropic and Wix.

That product push has already shown up in the numbers. monday.com reported $333.9 million in fourth-quarter 2025 revenue, up 25 percent from a year earlier, and 27 percent revenue growth for fiscal 2025 with a 14 percent non-GAAP operating margin. It said monday vibe became the fastest product in company history to pass $1 million in annual recurring revenue, while customers with more than $50,000 in ARR accounted for 41 percent of total ARR. Earlier, the company had reported 32 percent quarterly revenue growth for fiscal 2024 and a 112 percent net dollar retention rate, evidence that the market once rewarded pure expansion. The next phase looks different. monday.com is now being judged on whether AI can defend that growth without making the software layer itself easier to replace.