Was yesterday’s sale just the beginning?

• UBS downgraded ServiceNow ( NOW ) to Neutral from Buy with a $100 price target, citing concerns that autonomous AI agents could disrupt enterprise software incumbents and compete with traditional workflow automation platforms.

• ServiceNow’s premium valuation is under pressure from the AI ​​agent disruption story, but the company’s strong fundamentals – 21% revenue growth, doubled Now Assist ACV adoption and $12.85 billion in remaining performance obligations – could justify the sell-off.

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ServiceNow (NYSE:NOW) Shares fell 7.86% on Thursday, April 9, and continued to fall Friday morning as the sell-off in the broader software sector accelerated on fears that managed AI agents could disrupt enterprise software incumbents. Now UBS is piling on, downgrading ServiceNow from Buy to Neutral with a new price target of $100 – and the stock is already at $88, below that new target.

For long-term investors, the real question is whether the competitive landscape for business workflow automation is changing in a way that makes ServiceNow’s premium valuation harder to justify.

The downgrade by UBS analysts reflects growing concerns that the wave of AI agents, instead of being a pure tailwind for ServiceNow, could become a competitive threat. Enterprise buyers are increasingly evaluating whether purpose-built AI agents can replace or bypass traditional workflow platforms. That story weighed heavily on the software sector this week and appears to be central to UBS’s decision to sit on the sidelines.

READ: The analyst who called NVIDIA in 2010 just named its top 10 AI stocks

Granted, ServiceNow’s fundamentals remain strong. Fourth quarter 2025 revenue was $3.568 billion, up 21% year over year, surpassing estimates of $3.532 billion. Now, Assist’s net new ACV has more than doubled year-over-year, and current remaining performance obligations have increased 25% to $12.85 billion. Yet UBS clearly believes the risk-reward ratio has shifted.

ServiceNow is an enterprise cloud platform built around IT service management and AI-powered workflow automation. Think of it as the operating system that large companies use to route, track and resolve everything from IT tickets to HR requests and security incidents. The company ended fiscal 2025 with revenue of $13.278 billion, up 21% year-over-year, and 603 customers generated annual contract value of more than $5 million.

ServiceNow shares are down 41% this year and UBS’s $100 price target is now above the current share price – showing how quickly this sell-off has happened. The 52-week high is $211.48, making the current level look like a different stock entirely. The wider analyst community still has a consensus price target of $183.99 with 43 Buy or Strong Buy ratings versus just 3 Holds and 1 Sell – so UBS is clearly in the minority here.

That said, the disruption thesis of AI agents deserves serious attention. If autonomous agents reduce dependence on structured workflow platforms, ServiceNow’s sticky enterprise contracts could face longer-term renewal pressure, even if the numbers hold up in the short term.

If you believe that ServiceNow’s platform will become the governance and orchestration layer for AI agents rather than a victim of it, the sell-off seems like an opportunity. CEO Bill McDermott made exactly that argument in January, calling ServiceNow “the AI ​​control tower for business reinvention.” Notably, McDermott bought 28,682 shares on the open market on February 27 at prices between $104.6 and $105.96 – a meaningful vote of confidence near current levels.

On the other hand, if the thesis about AI agent disruption turns out to be correct and business buyers start moving along traditional platforms, the multiple compression could continue. UBS’s downgrade is a signal worth taking seriously, even if the broader trend has not yet followed suit.

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