UBS Downgrades ServiceNow to Neutral as AI Shifts Software Spending Priorities

UBS has downgraded ServiceNow Inc. (NOW) from Buy to Neutral, citing a significant shift in corporate spending dynamics. The investment bank noted emerging signs of budget pressure within the non-AI software sector as companies increasingly prioritize artificial intelligence initiatives. Analysts expressed concern that AI investments are beginning to cannibalize budgets previously allocated to traditional core IT systems. Furthermore, customers are showing a growing preference for building lighter, AI-driven workflow tools on top of existing infrastructure rather than expanding traditional software suites. This structural trend poses a potential challenge to ServiceNow's market dominance, prompting a more cautious outlook on its growth trajectory. The downgrade reflects broader risks for the SaaS sector as enterprises re-evaluate their technology stacks in the AI era.