ServiceNow has become a widely held short position among hedge funds as investor sentiment toward software names remains under pressure due to concerns about artificial intelligence disruption, according to a report by Reuters citing analysis from JPMorgan Chase.
The software group has seen short interest rise to around 2.9%, while its share price has fallen roughly 35% year-to-date, reflecting broader weakness across the sector following a sharp sell-off earlier in the year.
Market concern has centred on the potential for AI to disrupt established software business models, with investors reassessing valuation multiples and growth expectations despite reassurances from industry participants that the long-term impact may be less severe than initially feared.
JPMorgan noted that sentiment across the software sector has remained fragile since the February downturn, and argued that a single earnings release is unlikely to materially change the broader market narrative or reduce the existing overhang on the stock.
The bank also highlighted positioning activity among investors holding short exposure to ServiceNow, suggesting hedging strategies ahead of upcoming earnings. These include the use of short-dated call spreads funded by out-of-the-money put sales, designed to manage risk around near-term volatility while maintaining downside exposure.
