ServiceNow Plunges 2.68% Amid AI Integration Doubts and Sector Volatility

Summary
• ServiceNow (NOW) tumbles 2.68% to $146.86, marking its worst intraday drop since Q4 2025.
• The $7.75B Armis acquisition and mixed analyst ratings fuel uncertainty over AI-driven growth.
• GraniteShares 2x Long NOW Daily ETF (NOWL) mirrors the decline, down 5.13% on surging volatility.
• Intraday range of $146.18–$150.30 highlights sharp sell-off amid regulatory and valuation concerns.

ServiceNow’s sharp decline reflects investor skepticism over its AI integration strategy and valuation. The $7.75B Armis acquisition, while strategic, has raised questions about execution risks. Analysts remain split, with Macquarie’s neutral stance clashing against bullish forecasts. The leveraged ETF’s steep drop underscores the sector’s fragility.

AI Integration Doubts and Analyst Divergence Spark Sell-Off
ServiceNow’s 2.68% drop stems from a confluence of factors: the $7.75B Armis acquisition, which, while strategic, has raised questions about integration complexity and valuation. Analysts like Macquarie (neutral) and Jefferies (bullish) highlight divergent views, with the former citing execution risks and the latter emphasizing AI-driven growth. Meanwhile, the leveraged ETF GraniteShares 2x Long NOW Daily ETF (NOWL) fell 5.13%, amplifying the sell-off. The stock’s 52-week low of $135.73 looms as a critical support level, with technical indicators like RSI (1.54) and MACD (-176.01) signaling extreme bearish momentum.

Options and ETF Plays in a Volatile AI Landscape
• GraniteShares 2x Long NOW Daily ETF (NOWL): -5.13% decline mirrors NOW’s volatility, amplifying directional risk.
• 200-day MA: $865.81 (far above current price), RSI: 1.54 (oversold), MACD: -176.01 (bearish divergence).
• Bollinger Bands: $1047.06 (upper), $387.64 (middle), -271.79 (lower) – price near lower band, suggesting oversold conditions.

Top Options Contracts:
• NOW20260116P135 (Put): Strike $135, Expiry 2026-01-16, IV 32.94%, Leverage 979.20%, Delta -0.0468, Theta -0.0089, Gamma 0.0129, Turnover 445. High leverage and moderate delta position this as a bearish hedge. Payoff: $11.86 (5% downside scenario).
• NOW20260116C142 (Call): Strike $142, Expiry 2026-01-16, IV 40.37%, Leverage 21.92%, Delta 0.7193, Theta -0.6306, Gamma 0.0362, Turnover 4050. Strong gamma and moderate IV make this a short-term bullish play. Payoff: $4.86 (5% downside scenario).

Aggressive bears should consider NOW20260116P135 into a breakdown below $147.45 (30D support). Bulls may target NOW20260116C142 if $146.86 holds and breaks above $149.94 (today’s open).

Backtest ServiceNow Stock Performance
The performance of NOW (New Oriental Online) after an intraday plunge of -3% from 2022 to the present has been backtested, showing a strategy return of 52.70%, a benchmark return of 42.97%, and an excess return of 9.73%. The strategy has a CAGR of 11.39% and a maximum drawdown of 0.00%, indicating a strong risk-adjusted performance.

Act Now: Short-Term Volatility Presents Strategic Entry Points
ServiceNow’s sharp decline has created a high-risk, high-reward environment. The 200-day MA ($865.81) and 30D support ($147.45) are critical for near-term direction. With RSI at 1.54 and MACD at -176.01, oversold conditions suggest a potential rebound, but execution risks from the Armis acquisition linger. Microsoft (MSFT), the sector leader, fell 1.38%, signaling broader tech sector fragility. Investors should prioritize NOW20260116P135 for bearish exposure or NOW20260116C142 for a bullish breakout. Watch for a breakdown below $146.18 (intraday low) or a rebound above $150.30 (intraday high) to confirm direction.