Mercedes-Benz Opens AI Chapter with HCLTech as 33,000 Workers Strike and Shares Bounce

Mercedes-Benz signs $1.14B IT deal with HCLTech for AI-driven overhaul, while facing 17% profit drop, worker revolts, and a stock at 7.7 forward P/E with 7.4% yield.

Mercedes-Benz is trying to steer through a punishing stretch of falling profits, worker revolts and an angry stock market, while simultaneously signing a $1.14 billion IT deal that aims to drag its digital infrastructure into the AI era. The juxtaposition could hardly be starker: on one side billions earmarked for technology, on the other tens of thousands of employees walking off the job.

An estimated 33,000 workers demonstrated at multiple Mercedes-Benz sites over the weekend, with Sindelfingen bearing the brunt of the protests. Their grievance is straightforward: management wants a 40-hour work week with no pay increase and has pushed a scheduled special bonus into next year. The IG Metall union is already warning of a "hot summer" ahead. The underlying driver of this cost-cutting push is a 17% plunge in first-quarter 2026 profit, with Chinese sales collapsing by more than a quarter.

A tech pivot worth over a billion dollars

The Stuttgart-based carmaker has handed control of its IT infrastructure to Indian outsourcer HCLTech in a contract valued at roughly $1.14 billion. HCLTech will build a new AI-powered operating model for the company, replacing Infosys, which lost its previous mandate. The partnership is initially set to run until the end of 2031, with Mercedes holding an option to extend for another five years. The stated goal is a full modernisation of digital workplaces across the group.

Stock finds a technical floor

On the equities side, Mercedes shares closed Friday at €45.40, notching a weekly gain of 4.91% after scraping a fresh year low of €42.64 in late June. The rebound, analysts say, is largely a mechanical bounce: the stock hit the lower band of its trend channel, the Relative Strength Index had sunk into deeply oversold territory, and bargain hunters stepped in. The RSI has since recovered to a neutral 43.8, removing one layer of technical pressure.

Still, the year-to-date loss sits at a painful 26.37%, and the share price remains well below its 200-day moving average of €54.80. The immediate resistance lies at the 50-day moving average of €48.44. A clean break above that level would put the psychologically important €50 mark back in play. Fail to hold above the recent low, however, and the flicker of recovery will fizzle out.

Cheap valuation and fat yield tempt the brave

Fundamental investors are eyeing a valuation that looks historically depressed. Analysts peg the forward price-to-earnings ratio for 2026 at 7.7, dropping to 6.1 in 2027—both well below long-term averages. Meanwhile, the prospective dividend yield has swelled to 7.4%, offering a siren call to income hunters willing to stomach the stock’s 29.4% volatility band.

What’s next on the calendar

Pressure from the rank and file is set to escalate on 9 July, when workers plan a car rally through Stuttgart to underline their demands. A more significant date for investors falls on 14 July, when Mercedes will deliver a preliminary operational update ahead of its next quarterly numbers. That update will be scrutinised not only for the earnings trajectory but also for any signs that management can balance labour costs, AI investment and shareholder returns without one side blowing up the other.