ServiceNow's multiple is being compressed, says Jim Cramer

Summary

Jim Cramer explains that P/E multiple compression is hammering enterprise software/SaaS stocks, especially ServiceNow and Salesforce, even though their underlying growth remains strong. He argues AI threatens per-seat software models by enabling clients to do more with fewer paid users, causing the market to treat these names as ex-growth. Cramer says he will not fight the market's judgment near term, but he would revisit ServiceNow and Salesforce once their multiples bottom and begin turning.

• Cramer frames the P/E multiple as the key driver of stock prices.
• Enterprise software/SaaS stocks are being hit by AI fears and multiple compression.
• ServiceNow reported strong numbers but the stock fell sharply and its forward P/E has compressed.
• Cramer says AI threatens seat-based pricing because clients may need fewer users.
• Salesforce is described as facing the same multiple compression despite strong business performance.
• Cramer does not want to fight the market's judgment while the multiple is still shrinking.
• He says ServiceNow and Salesforce could become buys after multiples bottom and turn.