ServiceNow Faces Potential Microsoft Challenge To Its AI Orchestration Lead In 2026, Analyst Says

ServiceNow, Inc. (NYSE:NOW) shares are trading lower after Keybanc analyst Jackson Ader downgraded the stock from Sector Weight to Underweight and announced a price target of $775.

• ServiceNow stock is showing notable weakness. What’s behind NOW decline?

Analyst View

The analyst writes that the recent trends in IT back-office employment raise concerns that ServiceNow could face AI-related pressure in the coming quarters.

While ServiceNow's own AI offerings use a hybrid monetization model that may offset some seat-count pressures, similar strategies have not fully protected other SaaS sub-sectors under comparable circumstances, notes the analyst.

Also Read: ServiceNow Makes Major AI Play To Modernize Canada’s Public Sector

Also, Ader anticipates that ServiceNow's current perception as an AI orchestration leader could lose ground to Microsoft in 2026.

Government budget-related headwinds, while not as severe as initially feared, may still impact spending scrutiny, says the analyst.

Finally, the analyst notes that compared with peers in his coverage, ServiceNow's growth is slowing, and the company is increasing inorganic spending more than ever.

Key Estimates  

Despite the downgrade, the analyst continues to project FY1 revenue at $13.227 billion, reflecting 20.4% growth, and FY2 revenue at $15.584 billion, up 17.8%.

However, the analyst expects ServiceNow to see revenue deceleration in FY0 (-1.9%), FY1 (-2.0%), and FY2 (-0.2%).

Recent Key Events

ServiceNow is reportedly in advanced talks to acquire cybersecurity firm Armis, which could value the startup at up to $7 billion, according to people familiar with the matter.

NOW Price Action: ServiceNow shares are down 11.53% at $765.32 at publication on Monday.

Read Next:

• Anthropic Engineers Reveal AI Is Transforming Workflows, Killing Mentorship, Sparking Fears Of Becoming ‘Irrelevant’ In AI Era

Photo: Shutterstock