ServiceNow Inc (NYSE:NOW) stock rose 1.48% (As on December 16, 11:47:05 AM UTC-4, Source: Google Finance) after KeyBanc analyst Jackson Ader downgraded the company to Underweight from Sector Weight with a $775 price target. There are signals in the IT back-office employment data that raise the likelihood that the “death of software-as-a-service” narrative could come for ServiceNow in 2026, the firm tells investors in a research note. Ader thinks generative AI is going to lead to “seat count pressure” at major companies – essentially, AI will increase productivity and therefore lower the number of subscriptions companies will need to buy. While ServiceNow offers “hybrid” pricing — or higher prices for its AI-infused software — Ader wrote, “this has not kept other SaaS sub-sectors afloat when this narrative has come for them.”
The firm also warned that ServiceNow’s perceived position as an AI orchestration winner “may cede ground to Microsoft in 2026,” while government spending scrutiny and increased inorganic investment add to the uncertainty, according to KeyBanc. Adobe was also downgraded from Overweight to Underweight, with KeyBanc establishing a $310 price target. The firm said the valuation discount is justified by “decelerating revenues, limited margin upside and AI competitive threats.” KeyBanc noted that Adobe trades at 17.3x CY27 GAAP P/E, compared with a peers’ median of 31.4x, adding that upside risks would require a clear reacceleration in growth.
Meanwhile, ServiceNow had two rather significant pieces of news today: One, it was reported ServiceNow is in talks to make what appears to be an expensive acquisition. Two, an analyst downgraded shares, predicting that fears over the potential disruption from generative artificial intelligence would cap ServiceNow’s valuation multiple in 2026. ServiceNow is in advanced talks to acquire Armis, a private U.S.-Israeli cybersecurity company that protects internet-connected devices from advanced threats. Bloomberg reported the company could be valued at roughly $7 billion.
Moreover, as of September 30, 2025, current remaining performance obligations (“cRPO”), contract revenue that will be recognized as revenue in the next 12 months, was $11.35 billion, representing 21% year-over-year growth and 20.5% in constant currency. The company had 103 transactions over $1 million in net new annual contract value (“ACV”) in Q3, and ended the quarter with 553 customers with more than $5 million in ACV, representing 18% year-over-year growth. In addition, ServiceNow and FedEx Dataworks announced their collaboration to build AI-powered supply chain workflows that combine FedEx Dataworks’ global logistics intelligence with the ServiceNow AI Platform’s automation and workflow capabilities.