Sometimes an upgrade isn't exactly good news. ServiceNow Inc. (NOW) just got bumped from Sell to Neutral by Guggenheim Securities, but don't break out the champagne just yet.

The Analyst's Move: John DiFucci upgraded the rating from Sell to Neutral while removing his price target altogether. The upgrade comes after ServiceNow's stock dropped below his previous target, though DiFucci warns there could still be more downside ahead.

What's Behind the Concerns: The company is wrestling with new AI challenges and merger-related risks, according to DiFucci's upgrade note. The big issue? ServiceNow's results suggest that AI monetization hasn't actually happened yet, despite all the buzz around the technology.

Then there's the acquisition spree. ServiceNow has already closed five M&A deals this year and recently announced plans to acquire identity security startup Veza. Bloomberg reported the company might be nearing a $7 billion deal to buy security startup Armis.

"Besides the typical risk that's introduced from expensive M&A, we believe this strategy is not launched from a position of strength, nor points to savvy product strategy," DiFucci wrote. Translation: buying companies left and right might mean you're struggling to build what you need internally.

NOW Price Action: Shares of ServiceNow were up 0.86% to $771.81 at the time of publication on Tuesday.