Why ServiceNow Stock Topped the Market Today
Key Points
These buys will enhance its native platform.
Cybersecurity solutions are justifiably popular in a world loaded with hacking threats.
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Enterprise software developer ServiceNow (NYSE: NOW) enjoyed a modest rally on the stock exchange Tuesday, with its shares gaining 0.4% on a day when the benchmark S&P 500 index landed in negative territory. Investors were cheered by the company's closing of its latest asset buy.
New month, new acquisition
Just after market close on Monday, ServiceNow divulged that it had completed its acquisition of cybersecurity company Armis. The deal was originally announced last December, with the two companies agreeing that ServiceNow would be Armis' new owner for roughly $7.75 billion in cash.
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In its press release trumpeting the acquisition's close, ServiceNow said that owning Armis "extends ServiceNow's security platform into the physical and operational layers of the enterprise, adding the cyber asset intelligence foundation and business context that enterprises need to deploy agentic artificial intelligence (AI) with trust and control at scale."
ServiceNow has been on something of a cybersecurity shopping spree lately. Early last month it finalized the acquisition of identity security company Veza. In contrast to the Armis deal it did not disclose the price it paid, although reports from several media outlets put the cost at over $1 billion.
Spending while flush
ServiceNow wrote that it is funding the Armis deal with a combination of cash on hand and debt. It didn't provide more details. As of the end of 2025, it had a fairly solid position in cash and short-term investments of nearly $6.3 billion. Its long-term debt at that point stood at under $2.3 billion.
So while neither of these recent acquisitions is coming cheap, they're within ServiceNow's means to pay for them. And cybersecurity, in many forms, will always be mission-critical and important to a wide range of businesses worldwide. Both purchases look like clever, forward-thinking moves to me.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.
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