ServiceNow Dips Premarket Amid UBS Cut, Rising AI Pressure From Anthropic

• UBS downgraded the stock to ‘neutral’ from ‘buy,’ although Benchmark and BNP Paribas placed a ‘Buy’ rating on NOW just recently.
• There’s a growing debate whether the selloff in SaaS stocks is overdone; key names, including Salesforce, Intuit, and Adobe, trade at multi-year lows.
• Stocktwits sentiment for NOW improved over the week and was ‘extremely bullish’ on Friday.

ServiceNow shares fell 1% in Friday’s premarket session, extending a sharp selloff triggered by an analyst downgrade and broader weakness in software stocks amid concerns that Anthropic and other AI firms are eating into software demand.

UBS downgraded the stock to ‘Neutral’ from ‘Buy’ and slashed its price target to $100 from $170 on Thursday. The current target implies an 11% upside from the stock’s last close. 

Anthropic is launching new AI functionality at a rapid pace, which has hammered software-as-a-service (SaaS) stocks, including ServiceNow, over the last few months. In the last two days, Anthropic previewed its new AI model, Mythos, with cybersecurity applications, and launched a new product that makes it easier for enterprises to build and deploy AI agents.

Meanwhile, ServiceNow announced that its entire product portfolio will include AI, data connectivity, workflow execution, security, and governance as standard features rather than separate purchases.

SaaS Selloff Debate

There’s a growing debate about whether the selloff in SaaS stocks is overdone. Earlier this month, Benchmark initiated coverage on ServiceNow with a ‘Buy’ rating, arguing that the company is well-positioned to benefit from the Agentic AI supercycle and its strong leadership under CEO Bill McDermott.

Back in February, WedBush was the biggest proponent of the view and added ServiceNow and Salesforce to analyst Dan Ives’ AI 30 list. Investors have been irrationally treating giants like Salesforce and ServiceNow as obsolete, Ives had said at the time. However, their stocks have declined further since then, partly due to market volatility linked to the U.S.-Iran war.

Retail View On NOW Improves

On Stocktwits, the retail sentiment for NOW has climbed this week and was ‘extremely bullish’ on Friday.

“It’s hard to find words when the chart only knows how to sink,” remarked a trader. “The relentless red has turned optimism into a weary silence. Sometimes, the numbers tell a story of pain that data alone can't capture.” 

Another wrote: $NOW Maybe it really is that simple. Revenue keeps growing, and over time, the stock follows… Sometimes investing isn’t complicated: find great businesses, let them grow, and be patient. $NOW shows exactly that.”

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