ServiceNow Adds HCLTech and Google to Its AI Arsenal — The Stock Still Can't Catch a Break

HCLTech, Google Cloud and ServiceNow launch a three-way alliance to deploy enterprise AI agents into live operations. Stock drops 7% despite strong subscription revenue and oversold RSI, reflecting macro uncertainty.

On June 25, HCLTech, Google Cloud and ServiceNow unveiled a three-way alliance designed to push enterprise AI agents out of the pilot phase and into live operations. The move marks the latest in a string of high-profile partnerships the workflow software giant has assembled over recent weeks — and the market response has been telling. The stock kept sliding.

Under the deal, HCLTech’s new Gemini Enterprise unit will combine ServiceNow’s workflow platform with Google’s Gemini models. The initial product lineup targets factory floors, field service, customer service and IT operations. A factory hall assistant, a field service tool using Gemini Live, and an ITOps agent available through the Google Cloud Marketplace are among the first offerings. ServiceNow’s AI Control Tower will provide the oversight layer to keep those agents from running wild.

The Control Tower itself is gaining traction. In the first quarter, average order volume for the product doubled. That dovetails with broader industry research: Gartner projects global IT spending will hit $2.59 trillion this year, a 47% jump, with the fastest growth flowing into enterprise AI. Yet the company’s share price is moving in the opposite direction. From EUR 78.72, the stock has dropped roughly 7% in the past seven days and more than 10% over the last month. The relative strength index sits at 38.7, deep in oversold territory.

This pattern has become frustratingly familiar. Good news arrives, and the stock falls. After ServiceNow announced a partnership with IBM to modernize legacy software and make data AI-ready — with joint solutions due in the second half — the share price slid. After the company deepened ties with Microsoft to let IT administrators monitor AI agents inside Word and Outlook, and brought Nvidia’s computing power onto its platform, the market barely blinked. An Accenture tie-up giving clients access to over 300 pre-built AI capabilities? Same result. The appointment of Inspira Enterprise as a global delivery partner triggered a 1% loss.

The market’s indifference has a logic, even if it feels perverse. Software stocks are acutely sensitive to long-term interest rates. Their valuations depend on earnings years into the future, so every tick higher in bond yields compresses the multiple. Macroeconomic uncertainty is drowning out any single company’s operational wins.

But the operational wins are real. Subscription revenue rose 19% in the first quarter. ServiceNow completed a $2.0 billion share buyback program. Its debt-to-equity ratio is 0.21; interest coverage is nearly 300 times. The balance sheet leaves room for further investment or shareholder returns. At the recent Knowledge conference, the company introduced "Otto," an AI experience designed to turn user intentions directly into outcomes — a product aimed squarely at the biggest headache in corporate AI adoption.

That headache was quantified by a recent MIT study: 95% of generative AI pilot projects deliver no measurable financial benefit. The average enterprise runs hundreds of applications with hastily bolted-on AI features and no central control. IT chiefs are responding by consolidating budgets, awarding fewer contracts, and betting on platform winners. ServiceNow’s entire model — connecting legacy systems, cloud apps and AI agents into a single control tower — targets that pain point.

Analysts see a significant disconnect between the stock and the fundamentals. A consensus of 48 analysts rates the shares a Strong Buy, with an average 12-month price target of $141.48. Another analyst group sets a target of EUR 125.05. Both imply substantial upside from current levels. The gap between those assessments and the market price is as wide as it has been in recent memory.

The irony is hard to miss. Every time a company’s unstructured AI experiment fails to produce returns, the argument for a disciplined orchestration platform like ServiceNow’s grows stronger. The market just isn’t willing to pay for that logic right now. For the stock to catch a bid, either the macro clouds need to clear, or the mounting number of agent-based deployments will eventually have to show up in revenue — and sooner or later, one of those will give.