ServiceNow (NOW) stock plunged 7.6% on Friday after UBS downgraded the stock to Hold from Buy and lowered the price target to $100 from $170, as it is no longer confident that the company is better positioned to face AI (artificial intelligence) disruption risks relative to other application software peers.
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UBS Analyst Moves to the Sidelines on ServiceNow Stock
UBS analyst Karl Keirstead highlighted that ServiceNow was UBS’ only Buy-rated stock in the application software space, as the firm believed that it was better positioned in the “AI era” compared to the other players in the sector.
However, Keirstead’s confidence in NOW has weakened amid signs of spending curbs on non-AI application software. Notably, AI infrastructure investments are taking priority over core software spending. Consequently, the analyst moved to the sidelines despite the significant year-to-date pullback in NOW stock, which is trading at 15x 2026 free cash flow.
Additionally, the 5-star analyst expects “skinnier-than-normal beats” in the quarters ahead and more limited upside to the guidance for stable organic subscription revenue growth of 19% (constant currency) in 2026. The analyst lowered his cRPO (current remaining performance obligation) growth estimate, exiting 2026 at 16% (constant currency), down from the previous estimate of 20%.
Is ServiceNow a Good Stock to Buy?
Despite ongoing pressures, Wall Street has a Strong Buy consensus rating on ServiceNow stock based on 30 Buys, four Holds, and one Sell recommendation. The average NOW stock price target of $179.65 indicates 116.5% upside potential.
