ServiceNow and Fortinet Fall 24.3% at the Open Despite Quarterly Revenue Growth
Key Facts
ServiceNow and Fortinet shares each fell 24.3% at the opening of the October 29 session, while Eli Lilly shares rose 7.7% after the company reported strong quarterly results and raised its annual revenue outlook. The divergence came as all three companies reported revenue growth, but investors reassessed software stocks amid concerns that AI could disrupt their traditional business models. Lilly posted third-quarter revenue of $24.397 billion, up 39% from the same period in 2025. ServiceNow and Fortinet also reported operating growth, but results and outlooks that failed to meet investors’ high expectations weighed on their shares. The opening moves showed a widening divergence across the market, with other technology stocks falling and companies in different sectors rising.
Lilly’s adjusted earnings per share were $7.48 in the third quarter, topping analysts’ estimate of $5.60. Quarterly revenue reached about $24.4 billion, compared with a consensus estimate of $22.42 billion. The company raised its 2026 revenue outlook range to $91–92 billion from $85–87 billion, signaling an improved sales outlook. At the same time, however, Lilly lowered its adjusted earnings-per-share outlook range to $35–36 from $35.50–36.50. The company attributed the earnings adjustment to acquired in-process research and development expenses; third-quarter earnings included $4.57 per share from those expenses, compared with $0.71 in the same quarter a year earlier. The higher revenue outlook therefore did not come with a corresponding increase in the adjusted earnings forecast.
On the other hand, ServiceNow reported third-quarter subscription revenue of $3.988 billion, up 21% year over year, while total revenue rose 20.5% to $4.106 billion. The company raised its 2026 target for the annual contract value of AI deals to $1.7 billion, up 70% from the start of the year. Still, it forecast fourth-quarter subscription revenue of between $4.245 billion and $4.255 billion, and expected current remaining performance obligations to grow 18.5%. The results and outlook came as investors questioned software companies’ ability to protect their businesses from the shift driven by AI tools. Reuters said the S&P 500 Software and Services Index had risen 6% since the start of 2026, about half the S&P 500’s gain, amid concerns about disruption to traditional business models.
Fortinet’s third-quarter revenue rose 20% to $2.08 billion, while billings increased 29% to $2.34 billion, and GAAP earnings per share came to about $0.86. The company raised its 2026 revenue outlook to a range of $8.125–8.215 billion, with services revenue expected to be between $5.150 billion and $5.170 billion. Its chief executive said Fortinet had raised its full-year billings outlook for the third time this year. But the stock’s 119% gain since the start of 2026, according to Investing.com, raised the bar for investor expectations, while concerns focused on future growth and AI disruption. An Investing.com report also attributed the pressure to concerns about slower growth in Fortinet’s services; the stock fell about 27% in premarket trading, while ServiceNow was down more than 18% in that trading.
The moves were not limited to the two companies: Class A shares of Google fell 13.4% and Marvell Technology shares dropped 12.7% at the open. By contrast, Merck shares rose 5.0%, Fiverr International gained 6.6%, and Cava rose 5.7%. Lilly shares had closed on October 28 at $1,288.3, compared with $150.13 for ServiceNow and $174.08 for Fortinet, before the sharp moves in the following session. Lilly is scheduled to hold its third-quarter earnings call on October 29, 2026, at 10 a.m. Eastern time. Investors will be watching the next quarterly outlooks as they track subscription growth at ServiceNow and services revenue and billings at Fortinet.