ServiceNow Inc. agreed Tuesday to acquire cybersecurity startup Armis for $7.75 billion in its largest acquisition, as companies face increasingly sophisticated artificial intelligence (AI)-driven cyberattacks.

The enterprise software giant said it plans to integrate Armis’ security capabilities, including device scanning and threat detection, into its platform. The deal represents a strategic bet on the growing need for comprehensive cybersecurity as AI adoption expands the attack surface for organizations.

“In this AI world, especially with the agents, you’re going to need to protect these enterprises [because] every intrusion is a multimillion-dollar problem,” ServiceNow CEO Bill McDermott told CNBC.

Investors reacted cautiously to the announcement, sending ServiceNow shares down 3% over concerns about the company’s recent acquisition spree. ServiceNow has been on a buying binge in 2025: It bought AI agent platform Moveworks for $2.85 billion in March and identity security platform Veza in early December.

Chief Financial Officer Gina Mastantuono sought to reassure investors that the spending would slow. “Our security stack, with the acquisition of Armis, is very well positioned, so we won’t need to do any more M&A in security space,” she told Reuters.

Armis specializes in cyber exposure management and helps businesses protect internet-connected devices from cyber risks. The company recently surpassed $340 million in annual recurring revenue (ARR) with year-over-year growth exceeding 50%. Armis serves Global 2000 enterprises, including more than 35% of the Fortune 100 and seven of the Fortune 10.

The startup had been preparing for an initial public offering (IPO) and was valued at $6.1 billion in a November funding round led by Goldman Sachs’ alternative investment platform, with participation from CapitalG, Alphabet’s venture capital arm. Co-founder and CEO Yevgeny Dibrov had previously indicated plans to go public in 2026 or 2027 after reaching $1 billion in ARR.

“AI is transforming the threat landscape faster than most organizations can adapt. Every connected asset has become a potential point of vulnerability,” Dibrov said in a statement announcing the news. “Together with ServiceNow, customers will have a powerful new way to reduce their exposure and strengthen security at scale.”

ServiceNow expects the acquisition to more than triple its market opportunity for security and risk solutions. The company’s Security and Risk business crossed the $1 billion annual contract value threshold in the third quarter of 2025.

The deal comes as companies increasingly prioritize cybersecurity spending in the age of AI. Worldwide spending on information security is projected to increase 12.5% in 2026 to $240 billion, driven by rising threats and expanding AI adoption.

This year has seen several major cybersecurity acquisitions, including Google’s $32 billion purchase of cloud security startup Wiz and Palo Alto Networks Inc.s’ $25 billion deal for CyberArk.

The ServiceNow transaction, expected to close in the second half of 2026, will be financed through a combination of cash and debt and is subject to customary regulatory approvals. Upon completion, Armis’ approximately 950-person team will join ServiceNow.