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Shares of ServiceNow have come under pressure after UBS quietly adjusted its outlook, prompting investors to reassess whether the AI-driven rally still has room to run, or if expectations have simply moved too far, too fast.That shift in sentiment matters because ServiceNow (NOW) has long been positioned at the center of enterprise AI adoption. Founded in 2003, ServiceNow built its reputation on cloud-based platforms that help businesses automate workflows and streamline IT operations. Today, it sits firmly within both the S&P 500 and S&P 100, reflecting its importance in the broader software ecosystem.But as AI evolves from opportunity to disruption, even market leaders like ServiceNow are facing a more complex reality.UBS downgraded ServiceNow to Neutral from Buy, cutting its price target to $100 from $170. That is a sharp reset for a company that the firm once viewed as the best-positioned application software player in the AI era.Now, that confidence is fading. Why? Growing concerns that spending on non-AI software is tightening, and that could hit ServiceNow harder than expected.What changed? UBS now sees growing pressure on traditional software budgets, especially for non-AI tools. That shift could limit upside for companies like ServiceNow, even as they invest heavily in AI.Related: UBS Resets 2026 S&P 500 targetThe firm expects smaller earnings beats in the coming quarters and reduced upside to guidance. According to a press release, ServiceNow said that subscription revenue growth is projected at 18.5% to 19% in 2026, but that may not be enough to excite investors in the current environment.Even more telling, UBS lowered its estimate for remaining performance obligation growth to 16%, down from 20%, according to a report from Investing.com. That signals slowing forward demand.Despite the downgrade, ServiceNow is not backing away from AI. In fact, it is going all in. ServiceNow recently made AI a standard feature across its entire product portfolio. Instead of selling AI as an add-on, every offering now includes AI, data connectivity, workflow automation, and governance tools.At the center of this push is its new Context Engine. 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