ServiceNow (NYSE: NOW) plunged 6% on April 10 after senior UBS analyst Karl Keirstead issued a bearish note on the Santa Clara-headquartered software giant.
Citing a material shift in enterprise spending priorities, Keirstead downgraded NOW this morning to “neutral” and slashed his price target sharply to $100.
The dovish call comes as a major blow to ServiceNow stock, which has already seen a nearly 45% drawdown since early January.
ServiceNow stock isn’t insulated from AI disruption
NOW shares remain caught in a “downward spiral” as investors grapple with the reality that even blue-chip software names aren’t particularly shielded from the cannibalizing effects of the gen AI revolution.
While the NYSE-listed firm was previously viewed as a safe haven because of its robust workflow automation tools, Keirstead agreed in a research note on Friday that AI is actually proving a bigger threat for it than initially thought.
According to him, artificial intelligence is forcing a painful reshuffling of Fortune 500 budgets.
The excitement surrounding agentic AI tools – such as the latest releases from Anthropic – is making enterprise clients tighten their belts on core software to fund infrastructure and data investments.
Simply put, UBS is convinced that ServiceNow Inc is no longer immune to the budget-containment strategies currently sweeping through the tech world.
NOW shares aren’t inexpensive to own in 2026
Beyond immediate budget pressures, the bear case for ServiceNow shares is rooted in a demanding valuation that leaves little room for error.
Historically, the company has traded at a premium based on its consistent growth, but with artificial intelligence representing a structural risk, that premium is now evaporating.
After all, if autonomous agents can handle complex workflows across various platforms, the need for a centralized, high-cost seat-based license like ServiceNow’s would naturally diminish.
More importantly, NOW faces the “incumbent’s dilemma” where it must spend heavily to integrate AI features just to maintain its current market share, potentially squeezing margins.
With over half of UBS’s recent enterprise calls indicating a desire to cut non-AI spending, the firm faces a dual threat: slowing top-line growth and an expensive pivot toward an uncertain AI-native future.
Where options data suggest ServiceNow is headed next
Options pricing also currently warrants caution in buying the dip in NOW stock.
The put-to-call ratio contracts expiring August 21 signal a massive bearish skew, with the lower price on those contracts indicating potential for a significant further decline to about $65.
Moreover, the fact that ServiceNow currently sits decisively below its key moving averages (MAs) reinforces that bears are firmly in control across multiple timeframes.
That said, Wall Street analysts haven’t thrown in the towel on NOW yet. The consensus rating still sits at “strong buy”, with the mean price target of roughly $186 indicating potential upside of more than 120% from here.
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