ServiceNow Stock Slides 12% as $7B Armis Deal and KeyBanc Downgrade Rattle AI-Driven SaaS Outlook

ServiceNow Stock Plummets Amid $7B Armis Acquisition Rumors and KeyBanc Downgrade

On December 15, 2025, ServiceNow (NYSE: NOW) found itself at the center of a Wall Street storm. The enterprise software giant’s shares tumbled nearly 12%, closing around $762—its sharpest single-day decline in months. By midday, the stock had touched an intraday low near $761, making ServiceNow the day’s biggest loser in the S&P 500, as tracked by Reuters and Investopedia.

Why Investors Are Nervous: The Armis Deal and Analyst Downgrade

Two factors triggered this selloff. First, reports surfaced—citing Bloomberg and Reuters—that ServiceNow was in advanced talks to acquire Armis, a cybersecurity firm specializing in IoT and operational technology, for as much as $7 billion. This would be ServiceNow’s largest acquisition ever, eclipsing its previous $2.85 billion purchase of Moveworks earlier in 2025. Second, KeyBanc downgraded ServiceNow to “Underweight,” setting a $775 price target and warning of mounting risks as AI disrupts traditional SaaS business models.

The timing couldn’t be more precarious. Investors are already on edge as the broader tech sector faces pressure, with the S&P 500’s technology index down 2.3% for the week and giants like Oracle and Broadcom suffering steep losses, according to CNBC. David Wagner of Aptus Capital Advisors summed up the mood: “It feels like everyone hates the AI trade right now.”

Armis: A Strategic Prize, But At What Cost?

Armis, founded in 2016 and backed by Insight Partners, is a rising star in cybersecurity for connected devices. Recent fundraising valued Armis at $6.1 billion, and it boasts clients across more than 40% of the Fortune 100, as reported by Reuters and Investopedia. For ServiceNow, acquiring Armis could mean accelerating its push into operational technology security—a sector that’s rapidly expanding as companies digitize their infrastructure.

But the $7 billion price tag raises eyebrows. Such a large deal signals a pivot toward inorganic growth, potentially distracting ServiceNow from its AI roadmap. As MarketWatch explained, investors worry that big, expensive acquisitions might mask slowing organic growth or expose the company to integration headaches.

Wall Street Divided: Strategic Logic vs. Execution Risk

Analysts are split. KeyBanc’s downgrade was blunt, warning that AI could erode the pricing power and seat-based economics that have long fueled SaaS expansion. RBC Capital, however, remains bullish, reiterating an “Outperform” rating and a lofty $1,200 price target. RBC argues that ServiceNow is well-positioned to be an industry consolidator as software firms adapt to the AI-first era.

Other voices, like Morgan Stanley and Bernstein’s Peter Weed, recognize the strategic logic of expanding into operational technology but caution that investors want to see disciplined execution and clear integration plans. The market’s volatile reaction—a double-digit drop and billions in market value erased—reflects these underlying anxieties.

Recent Moves: Stock Split, Veza Acquisition, and AI Investments

This turmoil arrives as ServiceNow prepares for major changes. A 5-for-1 stock split will take effect December 18, 2025, reducing the nominal share price to about $152 but leaving the company’s market cap unchanged. Earlier this month, ServiceNow also announced plans to buy identity security firm Veza for roughly $1 billion, aiming to bolster access controls for cloud and AI environments, according to Forbes.

The company continues to invest in AI, with a CA$110 million multi-year commitment to expand public-sector AI adoption in Canada and the acquisition of Moveworks for $2.85 billion to drive agentic AI capabilities. As ServiceNow integrates these moves, investors are watching for signs that the company can build a cohesive, scalable AI-and-security platform.

What’s Next: Timeline, Forecasts, and Key Dates

The potential Armis deal could be announced within days, though talks may still falter or attract competing bids. If completed, investors will scrutinize the final price, deal structure, revenue impact, and regulatory hurdles. Meanwhile, the upcoming stock split on December 18 could confuse casual observers, as the headline price will drop by 80% due to the increased share count.

Wall Street forecasts remain broadly positive but with wide dispersion. Aggregated analyst targets cluster around $1,111–$1,154, with bulls aiming as high as $1,300 and bears below $800. These targets imply substantial upside from current levels, but investors should be wary: most forecasts have yet to fully price in the risks and rewards of the Armis acquisition or the shifting AI landscape.

Fundamentals Hold, But Growth Questions Loom

ServiceNow’s Q3 2025 results showed robust growth: subscription revenue jumped 21.5% year-over-year to $3.3 billion, and total revenues rose 22% to $3.4 billion. The company raised its full-year guidance to about $12.85 billion in subscription revenue, citing strong demand for AI-powered products. Long-term models project mid-teen revenue growth and annual earnings growth above 20%, according to Simply Wall St.

But the core question lingers: is ServiceNow’s growth sustainable through disciplined innovation, or will a string of expensive acquisitions dilute its strategic edge? The market’s swift reaction shows that investors are demanding more clarity on how the company will balance AI investments, security expansion, and integration risks.

ServiceNow’s dramatic selloff on December 15 highlights a pivotal moment for SaaS and AI stocks. The company remains a leader, but its ability to manage risk—especially around large-scale deals and the changing economics of AI—will determine whether it stays ahead or gets caught in the crosscurrents of industry disruption. Investors, analysts, and competitors alike are watching closely: ServiceNow’s next moves could set the tone for the entire sector in 2026.