Software Stocks Are Getting Crushed Again After Hours
Fortinet and ServiceNow both beat revenue estimates after the close, and both stocks cratered anyway, dragging dozens of other software names down with them in what has become a troubling pattern for the sector in 2026.
At about 8 p.m. ET on October 28, 2026, Fortinet (NASDAQ:FTNT | FTNT Price Prediction) was trading at $129.33 after hours. That was a 25.71% drop from its regular-session close of $174.08, and the close was already down 5.90%. ServiceNow (NYSE:NOW) fell 18.13% after hours to $122.91. It had closed the regular session at $150.13, down 3.00%.
Both companies reported September-quarter results after the close, and both beat revenue estimates. Many software and cybersecurity stocks fell with them, which makes this the second major software selloff of 2026.
At the close, Fortinet was worth $127.72 billion, and ServiceNow was worth $155.21 billion. One large software stock moved the other way. Microsoft (NASDAQ:MSFT) rose 2.90% after hours to $546.39 after its own earnings report. All after-hours quotes reflect light trading, and the October 29 regular session could look different.
Many Software Stocks Fell Alongside Fortinet and ServiceNow
| Company | After-Hours Price | After-Hours Move |
|---|---|---|
| CrowdStrike (NASDAQ:CRWD) | $249.67 | -6.37% |
| Zscaler (NASDAQ:ZS) | $240.00 | -6.18% |
| Palo Alto Networks (NASDAQ:PANW) | $370.48 | -6.09% |
| Salesforce (NYSE:CRM) | $229.12 | -5.36% |
| Workday (NASDAQ:WDAY) | $193.96 | -5.09% |
These five companies fell along with the two that reported. Tenable also fell after hours even though it beat estimates. F5 had already dropped 20.43% to $365.53 in the regular session. F5 had beaten estimates on October 27 but guided fiscal 2027 revenue growth to 8% to 9%.
Fortinet’s Services Slowdown Outweighed the Beat
Fortinet earned an adjusted $0.91 a share, ahead of Wall Street analysts’ $0.86 consensus estimate. Revenue of $2.08 billion beat the $2.06 billion consensus estimate. Product revenue rose 37% to $765 million, and billings rose 29% to $2.34 billion.
CEO Ken Xie said demand let Fortinet raise billings guidance “for the third time this year.” Fortinet also raised its full-year revenue outlook to $8.125 billion to $8.215 billion.
The weak spot was services, which grew only 13% to $1.31 billion. Fortinet cut its full-year service revenue forecast to $5.15 billion to $5.17 billion, down from $5.18 billion to $5.22 billion. Total revenue growth slowed to 20% from 26% in the June quarter.
Services matter more than hardware because they are recurring, higher-margin subscriptions, so slower growth there raises doubts about the business’s durability. The stock had also more than doubled in 2026 before the report, which left little room for mixed results.
ServiceNow’s cRPO Guidance Overshadowed Its Revenue Growth
Subscription revenue rose 21% to $3.988 billion, and total revenue grew 20.5% to $4.106 billion. Adjusted EPS of $1.00 missed Wall Street analysts’ consensus estimate of $1.02.
ServiceNow guided December-quarter cRPO growth to 18.5%, down from 21% in constant currency in the September quarter. cRPO (current remaining performance obligations) is contracted revenue the company expects to recognize within twelve months, so investors use it as an early look at next year’s sales.
CFO Gina Mastantuono called cRPO “a very nuanced accounting metric.” CEO Bill McDermott called ServiceNow “a one-of-one, rule of 57 growth company firing on all cylinders.” The stock fell anyway because investors priced in the lower guidance that came with those explanations.
Software Repeats Its 2026 Pattern
On April 9, 2026, the iShares Expanded Tech-Software ETF closed at its lowest level since November 2023. It was down more than 27% for the year then, and a SaaS index was down almost 40%.
The ETF recovered most of that ground, and its 52-week range runs from $73.93 to $117.76. It closed October 28 at $111.91 and then fell 3.84% after hours to $107.61. The same three things keep setting off these selloffs: slowing forward metrics, high valuations, and a market worry that AI will pull spending away from traditional software.
What Could Turn Software Stocks Around Next
The bull case is that both companies are still growing revenue at about 20%, and Fortinet raised its revenue outlook. The bear case is that services and cRPO are the forward indicators, and both slowed.
The group is likely to recover only after those forward indicators stabilize. Fortinet’s case is stronger, because billings growth of 29% suggests services revenue is coming later than expected while demand holds up.
The first test is whether Fortinet holds above $129.33 in the October 29 regular session. After that, keep an eye on Palo Alto Networks, which is expected to report around November 18, and CrowdStrike, expected around December 1.
Contact [email protected] for any questions or corrections.
Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
