ServiceNow stock: Armis deal seen more than tripling its market opportunity

ServiceNow (NYSE: NOW) investors may be concerned with the company spending $7.75 billion on buying Armis, but its CEO remains confident the deal will prove positive in the long run.

According to Bill McDermott, the agreement strengthens NOW’s footprint in artificial intelligence (AI) enabled cybersecurity and could help “more than triple” its market opportunity over time.

This statement alone suggests a near 3% post-announcement decline on December 23rd may be an opportunity for long-term investors to initiate or expand their positions in ServiceNow shares.  

Bernstein dubs Armis deal bullish for ServiceNow stock

Speaking with CNBC this morning, McDermott said the Armis deal positions ServiceNow to create an “AI control tower” for enterprises – and a senior Bernstein analyst seems to agree.

In his research note, Peter Weed dubbed the transaction “positive” for NOW, even calling Armis a “natural adjacency” to its existing platform.

What he means is: the cybersecurity startup fits logically with ServiceNow’s strengths in workflow and IT services management.

On Tuesday, Weed maintained his “outperform” rating on NOW shares, with a $218 price objective on a split-adjusted basis, indicating potential upside of another 45% upside from current levels.

As is evident, he recommends long-term investors to capitalise on today’s weakness in ServiceNow.

NOW shares are undervalued heading into 2026

Bernstein sees ServiceNow shares as worth owning heading into 2026, also because they’re one of the “cheapest” currently in software names, even though the company is growing well with no signs of a near-term slowdown.

“NOW’s price to 3-year-out free cash flow vs. growth rate is below the most bearish AI-narrative impacted large-cap application software peers like Adobe … and reputation-maligned Salesforce.”

According to Peter Weed, recent deals (including Moveworks in March 2025) are “normal” – and in no way indicative of a company struggling to meet its growth targets organically.

Note that Bernstein has previously called ServiceNow “the next Microsoft” – signalling immense confidence in its long-term growth and ability to dominate the enterprise software market.

How Wall Street recommends playing ServiceNow Inc

From a technical perspective as well, the Armis-driven sell-off in NOW stock looks like a buying opportunity.

Its near-term (20-day) relative strength index (RSI) currently sits at a tad above 36 – indicating the downward momentum is near exhaustion now.

What’s also worth mentioning is that Bernstein isn’t the only Wall Street firm keeping constructive on ServiceNow heading into the new year.

Consensus rating on the NYSE-listed firm also currently sits at “strong buy,” as per Barchart, with the mean target of $227 signalling potential for a whopping 50% upside in 2026.  

All in all, with strong analyst support, resilient growth, and technical indicators favouring buyers, ServiceNow stock’s recent dip (following Armis announcement) appears temporary – positioning NOW for significant further upside next year.

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