Continuous large-scale acquisitions face market scrutiny! ServiceNow (NOW.US) urgently denies rumors of acquiring Decagon.

ServiceNow (NOW.US) denied reports on Tuesday that it was interested in acquiring conversational AI startup Decagon. Amit Zavery, President, Chief Product Officer and Chief Operating Officer of ServiceNow, said in a statement: "We have noticed that erroneous information about our acquisition strategy appeared in the market today. To be clear, ServiceNow has no interest in acquiring Decagon and no intention of doing so." Earlier reports said Decagon, which focuses on using AI to automate customer service, had held preliminary discussions with ServiceNow and other potential buyers about an acquisition. After the related reports emerged, ServiceNow's stock price initially reacted negatively. In response, Jefferies Financial Group Inc. analyst Samad Samana said that given ServiceNow's frequent M&A activity recently, investors are concerned about large acquisitions, so it is not surprising that the stock initially reacted negatively. However, the analyst also noted that Decagon is expected to strengthen ServiceNow's customer service management product capabilities, a business that is one of the key engines driving the company's growth. Jefferies Financial Group Inc. reiterated its "Buy" rating on ServiceNow shares and maintained its $140 price target. Buying everywhere! Investors are suspicious of ServiceNow's acquisition strategy It is reported that since 2025, ServiceNow has announced multiple multibillion-dollar acquisitions to expand its AI, customer relationship management (CRM) and cybersecurity business capabilities. Earlier in 2025, ServiceNow acquired AI assistant and enterprise search company Moveworks for about $2.85 billion. In December 2025, the company agreed to acquire cybersecurity company Armis for $7.75 billion in cash. The deal was completed in April 2026 and is expected to expand ServiceNow's security and risk management business. Also in December 2025, ServiceNow agreed to acquire identity security company Veza for about $1.25 billion. The deal was completed in March 2026. In addition, ServiceNow acquired AI-driven sales software provider Logik.io for $506 million. After completing deals totaling more than $11 billion, investors remain doubtful about ServiceNow's acquisition strategy. Investors are questioning whether these acquisitions are accelerating an established strategy or reflect the company's need to rely on M&A to find new growth points. Investors are also worried about whether the company can truly generate sufficient returns from spending huge amounts on M&A in a short period, and whether these deals will increase financial burdens and drag down profitability. Completion of an acquisition does not mean synergies will be realized immediately. ServiceNow needs to integrate the acquired companies' technology, employees, products and sales teams into its existing platform, a process that may generate additional integration costs. For example, some market analysis has pointed out that the acquisition of Armis is expected to put some pressure on ServiceNow's margins and free cash flow margin in 2026. The company needs to bear the related costs first, then gradually realize revenue synergies and operational efficiency gains. If customer adoption of new products is slower than expected, or cross-selling between different businesses falls short of expectations, the benefits of the acquisitions may be delayed. At the same time, investors worry that ServiceNow will deviate from its strategy of focusing primarily on organic growth. ServiceNow's original core competitiveness lies in its enterprise software platform, subscription revenue and workflow automation. A series of large acquisitions may make the market worry that the company is increasingly relying on external M&A to expand its business, rather than mainly relying on its own product innovation and customer growth. Fortunately, when responding to the Decagon acquisition rumors on Tuesday, ServiceNow also made clear that it remains an organically focused company and said there is currently no major strategic gap that needs to be filled through large acquisitions. In addition, rapid changes in the AI industry create uncertainty around acquisition prices and technology value. ServiceNow is actively acquiring AI, cybersecurity and enterprise software companies to strengthen its platform capabilities and respond to the impact of AI technology on the traditional software industry. But technology in the AI field iterates quickly, and the competitive landscape is constantly changing. Even if an acquisition target currently has strong technology or customer resources, its products may still face issues such as intensifying competition, changes in technology routes or shifts in customer demand in the future. For investors, after ServiceNow has completed multiple acquisitions, indicators worth watching next include: whether subscription revenue growth can be maintained, whether margins and free cash flow can withstand integration costs, and whether newly acquired technology can truly bring customer growth and cross-selling. ServiceNow's third-quarter results, scheduled to be announced on October 28, may provide investors with clues to answer these questions. According to Koyfin data, the market expects the company's third-quarter revenue to grow 20% year over year to $4.09 billion; adjusted earnings per share are expected to rise 6% year over year to $1.02.