ServiceNow, Adobe: Why These 2 Software Stocks Are Trending Lower Today

Shares of ServiceNow (NOW) fell about 3%, while Adobe (ADBE) dropped roughly 2%, after top KeyBanc analyst Jackson Ader downgraded both stocks to Underweight from Sector Weight. The firm pointed to rising competition from AI tools and a tougher outlook for traditional software models.Claim 50% Off TipRanks Premium and Invest with Confidence Unlock hedge-fund level data and powerful investing tools designed to help you make smarter, sharper decisions Stay ahead of the market with the latest news and analysis so your portfolio is always positioned for maximum potential What's Weighing on ServiceNow Stock KeyBanc analyst Jackson Ader warned that wider use of AI could start to reduce demand for traditional SaaS products like ServiceNow's. The concern is not about ServiceNow's current execution, but about a tougher business environment. He set a price target of $775 on NOW, indicating 10% downside from current levels. KeyBanc said IT back-office hiring is slowing, and demand for new workers has yet to bottom. Since ServiceNow's software is closely linked to workflow and staffing needs, weaker hiring could slow growth. The firm also pointed to rising AI competition. ServiceNow's AI Agent Orchestrator may struggle to stand out as Microsoft's (MSFT) Agent 365 gains traction with large companies. In addition, KeyBanc flagged ongoing government budget scrutiny, which could weigh on demand from public-sector customers. Is Adobe Losing Its Edge in the AI Race? For Adobe, the concern is less about slowing demand and more about competition coming from all sides. KeyBanc said it sees limited room for outperformance in 2026, as Adobe battles traditional rivals, AI-native startups, and large language model developers at the same time. The firm said Adobe's recent results were solid, but its outlook left little room for surprise. Management guided for flat growth in new recurring revenue in 2026, while profit margins are expected to shrink. Despite the results, the stock barely moved, which KeyBanc views as a sign that competition is already weighing on shares. As part of the downgrade, KeyBanc set a price target of $310 on Adobe shares, indicating 13% downside from current levels. Which Software Stock Is Best to Buy Now? We use the TipRanks Stock Comparison tool to see how Wall Street analysts are rating ServiceNow and Adobe, and which company they believe has the strongest upside.