UBS Downgrades ServiceNow as AI Disrupts Software Spending

ServiceNow launched an AI-native platform and a new Context Engine to provide AI agents with real-time enterprise context and improve decision-making. To accelerate application development, the company introduced new Build Agent skills and an SDK, alongside a tiered offering model and the acquisition of Moveworks for its Autonomous Workforce product. Chief Operating Officer Amit Zavery stated the platform allows customers to start with a complete AI-native experience rather than a protracted procurement project.

These product launches followed a period of significant stock pressure, with shares hitting a 52-week low and dropping approximately 35% year-to-date. Despite reporting 2025 sales growth of 21% to $13.3 billion, the company faced a broader software-as-a-service market sell-off driven by concerns that AI could make traditional technology firms obsolete.

Following the product announcement, UBS downgraded ServiceNow from Buy to Neutral and lowered its price target from $170 to $100. Analyst Karl Keirstead noted that Fortune 500 enterprises are constraining spending on non-AI software to prioritize data and infrastructure investments expected to inflect in 2026. UBS warned that AI could allow companies to build lighter workflow tools, reducing demand for ServiceNow's core offerings. Shares fell 8.6% in New York on Friday following the downgrade, though 45 of 49 analysts covering the company maintain a buy or strong buy rating.