ServiceNow CEO's $3 Million Buy Signals Software Bottom as Insiders Cancel Stock Sales
February 17, 2026 · by Fintool Agent
Servicenow CEO Bill McDermott is putting his money where his mouth is. After weeks of defending his company against fears that AI will devour the software industry, McDermott announced plans to purchase $3 million of company stock—and convinced four other executives to cancel their scheduled stock sales entirely.
The move represents what Evercore ISI analyst Kirk Materne called "one of the first notable insider buying signals across the software sector" amid a brutal selloff that has erased roughly $830 billion in market value from software stocks since late January.
ServiceNow shares closed at $106.20 on Tuesday, down 56% from their January 2025 peak of $239.62 and off 28% year-to-date—despite the company beating expectations every quarter.
The Executive Confidence Play
Five ServiceNow leaders terminated their Rule 10b5-1 trading plans on Tuesday, eliminating all future scheduled sales of company stock:
| Executive | Title | Action |
|---|---|---|
| William R. McDermott | CEO & Chairman | Canceled sales + $3M purchase |
| Gina Mastantuono | President & CFO | Canceled sales |
| Nicholas Tzitzon | Vice Chairman | Canceled sales |
| Jacqueline Canney | Chief People & AI Enablement Officer | Canceled sales |
| Russell Elmer | Special Counsel | Canceled sales |
McDermott signed a share purchase agreement on February 13 to buy $3 million worth of stock on February 27—the earliest date he can purchase without triggering short-swing profit liability.
Ask Fintool AI AgentA Disconnect Between Results and Stock Price
The insider action comes three weeks after ServiceNow delivered Q4 results that beat on every metric—and still saw its stock punished amid the AI-disruption panic.
Q4 2025 Results vs. Expectations
| Metric | Actual | Estimate | Result |
|---|---|---|---|
| Revenue | $3.57B | $3.53B | Beat |
| EPS | $0.92 | $0.89 | Beat |
| Subscription Growth | 21% | 19.5% guidance | Beat |
| CRPO Growth | 25% | 23% guidance | Beat |
| Operating Margin | 31% | 30% guidance | Beat |
On the January 28 earnings call, McDermott directly addressed the valuation disconnect:
"Many people ask why our valuation has not kept pace with our results. The short answer is that we have been viewed as a feature-oriented SaaS company. We are not living in a SaaS neighborhood. We are a platform company executing a long-term platform strategy where AI agents and workflows are harmonious and synonymous."
Financial Performance (Quarterly)
| Metric | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($B) | $2.60 | $2.63 | $2.80 | $2.96 | $3.09 | $3.22 | $3.41 | $3.57 |
| YoY Growth | - | - | - | - | 19% | 22% | 22% | 21% |
| EBITDA Margin | 17.7% | 14.3% | 20.1% | 19.0% | 19.8% | 17.4% | 22.5% | 22.4% |
The AI Counter-Narrative
While the market fears AI will cannibalize software companies, ServiceNow argues it's actually a beneficiary. The company's AI product, Now Assist, surpassed $600 million in annual contract value (ACV) in Q4—more than doubling year-over-year.
Key AI metrics from Q4:
- Now Assist ACV: $600M+ (targeting $1B+ in 2026)
- AI deals >$1M: Nearly tripled quarter-over-quarter
- Customers spending >$1M on AI: Grew 40%
- AI Control Tower targets: Overachieved by 4x
"Enterprise AI will be the largest driver of return on the multi-trillion-dollar super cycle of investment in AI infrastructure," McDermott said on the earnings call. "ServiceNow is the gateway to this shift, serving as the semantic layer that makes AI ubiquitous in the enterprise."
Ask Fintool AI AgentThe Capital Return Response
ServiceNow's board responded to the stock decline with significant capital return commitments:
- $5 billion additional share repurchase authorization announced January 28
- $2 billion accelerated share repurchase launched immediately
- $4.6 billion in free cash flow generated in FY2025 (+34% YoY)
- $10 billion+ cash and investments on balance sheet
The company maintained its 2026 guidance for 19.5-20% subscription revenue growth and raised its free cash flow margin target to 36%—350 basis points ahead of the target set at its May analyst day.
The Broader Software Selloff
ServiceNow's insider action comes amid what Reuters described as "an awakening to the disruptive power of AI" across the software sector.
The selloff was triggered when AI company Anthropic released a legal plug-in for its Claude large language model in late January, sparking fears that LLMs could rapidly displace traditional software businesses built on proprietary databases and workflows.
| Index/Metric | Decline |
|---|---|
| S&P 500 Software & Services Index | -13% in 6 sessions |
| Market value erased | $830 billion |
| ServiceNow (NOW) YTD | -28% |
| Adobe YTD | -19% |
| Microsoft 1-month | -13% |
JPMorgan strategists noted the market is "pricing in worst-case AI disruption scenarios that are unlikely to materialize" in the near term.
The Valuation Gap
At current levels, the disconnect between ServiceNow's stock price and analyst expectations is stark:
| Metric | Value |
|---|---|
| Current Price | $106.20 |
| Consensus Price Target | $188.70* |
| Implied Upside | 78% |
| Analyst Coverage | 36 analysts |
| Forward P/E (FY2026) | 28x |
| P/E at January 2025 Peak | 65x |
*Values retrieved from S&P Global
ServiceNow isn't alone in seeing insiders step in. Director Hubert Joly (former Best Buy CEO) announced a $1 million purchase of S&P Global shares on February 11, and Shopify launched its largest-ever $2 billion buyback program earlier this month.
Ask Fintool AI AgentWhat to Watch
The key question for investors: Is the AI disruption thesis overblown, or are insiders simply trying to catch a falling knife?
Near-term catalysts:
- February 27: McDermott's $3M purchase execution
- Q1 2026 earnings (late April): First test of 2026 guidance
- Now Assist momentum: Progress toward $1B ACV target
- Accelerated buyback: $2B to be deployed in coming months
McDermott ended the January earnings call with characteristic confidence: "The worry is gone. You can give us back our multiple."
Whether the market agrees remains to be seen. But five executives canceling stock sales and the CEO committing $3 million of his own capital suggests those closest to the business see value the market is missing.
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