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Luke Kawa

ServiceNow CEO on the stock’s swoon: “You can give us back the market cap”

Investors have taken billions in market cap away from ServiceNow, and CEO Bill McDermott would very much like for it to be returned.

During the conference call that followed Q4 earnings on Wednesday, McDermott tried to reassure investors that the company’s recent M&A efforts weren’t made to latch onto lines going up in hopes of distracting from any looming deterioration in its core business:

“I wanted to make it very clear to the investors, I hear you, and we did not and never have bought an asset like many others have — and I know that’s probably why it’s on your mind — because we needed the revenue. What we needed is the innovation and the expanded growth opportunity of a great TAM [total addressable market] and a customer base that’s waiting for us. And as it relates to future M&A, we do not have a large scale M&A on the road map...

So, probably it was a little bit what’s going on over there at ServiceNow, and I noticed that we lost about $10 billion in market cap on that because of the worry. So now the worry is gone, you can give us back the market cap. And no, we’re not going after anything large. We now have them in the family and we’re going to grow them like we do everything else.”

McDermott attributed the downdraft in ServiceNow to its recent acquisitiveness. And it’s true that the stock did tumble upon reports that the company was acquiring cybersecurity firm Armis (which came on the heels of its Veza acquisition), then dipped again when the deal was announced at an even higher price than previously rumored.

Interestingly, McDermott was actually understating the pain on the call, or at least has a very generous return policy: the stock shed nearly $21 billion in market cap on December 15, the session it got dumped following reports around the potential Armis acquisition.

NOW has fallen more than twice as much as the iShares Expanded Tech Software ETF since December 12 through Wednesday’s close. More broadly, the software cohort has been branded with the equivalent of a scarlet letter by traders as of late, amid concerns that it’ll be disintermediated by AI tools and agents. In particular, Claude Code’s development of Cowork has been hailed as a “ChatGPT moment repeated” that threatens to disrupt large swaths of the industry.

Wedbush Securities analyst Dan Ives removed ServiceNow from his list of top 30 AI stocks at the start of December, saying that its AI monetization has been slower than anticipated so far.

ServiceNow is lower in premarket trading despite reporting top- and bottom-line Q4 beats in results that were broadly applauded by the analyst community, along with better-than-expected Q1 guidance.

That’ll be even more market cap that McDermott will likely want back.

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Tasha Matsumoto
8h
Semiconductors slump, dragging down stocks

The S&P 500 and Nasdaq 100 fell as chip stocks and AI-linked names lost steam. Oil prices slid on the prospect of the Strait of Hormuz reopening.

Grizzly bear growling USA.
markets
Paige Oamek

Lionsgate closes higher on Netflix acquisition rumor

Shares for the film production company Lionsgate soared on Tuesday following rumors of a potential buyout.

According to a person familiar with the possible merger and acquisitions deal, streaming giant Netflix is one of the companies that may be interested in buying Lionsgate Studios, per reporting by Semafor.

Neither Lionsgate nor Netflix confirmed the news, but nevertheless the stock climbed, closing up 14%.

Netflix closed lower on news that Fox will acquire Roku in an approximately $22 billion deal after it was also rumored that the streaming company was interested in that acquisition. “Netflix did not make a bid for Roku,” a spokesperson told Semafor. This comes after Netflix withdrew its buyout bid for Warner Bros. Discovery earlier this year.

Lionsgate’s shares are up 77% since January. Lionsgate owns massive franchises like “John Wick” and “The Hunger Games.” The film company has a market cap of approximately $4.7 billion, making it roughly 5x smaller than Roku and 13x smaller than Warner Bros.

markets
Helena Cheng

Oil tumbles below $80 to 3-month low on US-Iran deal

Oil prices slid to their lowest levels in more than three months today after a preliminary ceasefire agreement between the US and Iran raised expectations that more crude could return to global markets and key shipping routes through the Strait of Hormuz could reopen.

Brent crude fell below $78 a barrel while West Texas Intermediate dropped to $73.31, extending losses as traders priced in lower geopolitical risk premiums tied to Middle East supply disruptions.

The preliminary pact announced by President Donald Trump and Iranian leaders establishes a 60-day ceasefire to end the active hostilities that have choked the Middle East since late February. A formal memorandum of understanding is scheduled to be officially signed in Switzerland this Friday, according to Bloomberg report.

Trump said on Sunday that the Strait of Hormuz would be opened when the agreement is signed in Switzerland on Friday, writing on Truth Social, “Ships of the World, start your engines. Let the oil flow!”

US Energy Department data, meanwhile, showed that America’s strategic oil stockpiles sank last week to their lowest level since 1983, indicating sustained demand to rebuild them even if the Mideast conflict ends.

Stocks that moved lower:

markets
Helena Cheng

Eos Energy surges on commercial launch of second battery production line

Eos Energy Enterprises is surging in early trading after announcing the official start of commercial production at its second automated battery manufacturing line.

In a statement, the company said this milestone positions it to scale production of its proprietary zinc-based long-duration energy storage systems to meet rising commercial demand.

Management touted the enhanced efficiency of this facility, with design upgrades slashing raw material travel by 86% and shortening the physical production line length by 40% compared to Line 1.

“Battery Line 2 demonstrates our ability to continuously improve as we scale,” said John Mahaz, Chief Operating Officer of Eos. “It validates that our manufacturing system can be replicated and scaled with discipline.”

The battery energy storage company confirmed that while subassemblies will continue coming online through the early third quarter, full production capacity is targeted for the fourth quarter of 2026. The ultimate goal is to hit an aggregate 4 gigawatt-hours of annual manufacturing capacity by the end of 2026. Management also highlighted that Battery Line 1 already surpassed its full-year 2025 output within the first 164 days of 2026.

Today’s announcement builds on recent operational momentum for Eos, which posted better-than-expected Q1 sales and announced a joint venture with Cerberus Capital Management in May. However, shares are still down 37% year to date.

For the full year, Eos still expects to achieve revenues between $300 million and $400 million, in line with its previously provided guidance.

markets
Luke Kawa

Qualcomm reportedly in talks to acquire AI chip design company Tenstorrent

Qualcomm is in talks to acquire AI chip design firm Tenstorrent for $8 billion to $10 billion, according to The Information.

This transaction, if completed, would be another concrete signal of the San Diego-based chip company’s attempt to carve out a niche in the upstream AI space (data centers), rather than focusing on end-user devices.

Qualcomm’s key business of handset chips has fallen on hard times, particularly in China, due to the memory chip shortage.

Less than eight weeks ago, the chip company was the lowlight in the Philadelphia Semiconductor Index, down about 20% year to date.

Shares proceeded to surge over 60%, buoyed by optimism that the rising AI tide will lift all boats. With the release of Q2 earnings, CEO Cristiano Amon said that initial shipments of AI chips to a “leading hyperscaler” were on track for later this year, and to expect more on the company’s AI growth plans at its investor day on June 24 (next week). Last month, Bloomberg reported that Qualcomm is poised to sell “millions” of AI chips to TikTok parent ByteDance.

Established AI chip giants and hyperscalers alike have reached agreements with or gobbled up burgeoning AI chip companies as the boom rolls on. In December, Nvidia announced a major licensing deal with AI inference specialist Groq, while Meta bought AI chip startup Rivos in September.

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