ServiceNow is reshaping itself in real time — and the stock market is struggling to keep up. The enterprise software company has slashed hundreds of positions, deepened a strategic tie-up with IBM, and released a new employee experience module, all within weeks. Yet the shares keep sliding: down 4.81% in the past seven days and 5.09% over the last month, leaving the stock at €84.30 at Friday’s close.
The job cuts, announced this week, mark a stark reversal. In 2023, ServiceNow pledged not to reduce headcount. Now it is trimming staff, citing “real AI efficiency gains” inside its own operations. The company is effectively using the same artificial intelligence it sells to customers to make some internal roles redundant — a move management calls consistent, but one that risks eroding trust among investors who watch for mixed signals.
This restructuring is taking place alongside an expanded collaboration with IBM, announced in mid-June. The two companies aim to tackle one of the biggest obstacles to enterprise AI adoption: legacy systems and unstructured data. IBM brings advanced data, automation and AI expertise, while ServiceNow contributes its workflow orchestration platform. Joint solutions are expected in the second half of 2026 — close enough to be tangible, far enough away to offer no immediate proof.
ServiceNow’s positioning is clear: it wants to be the connective layer between applications, employees and business processes, not just another AI tool running alongside existing systems — what executives dismissively call “sidecar AI.” Whether large customers are willing to undertake the fundamental infrastructure modernisation required remains an open question.
The week also brought an unwelcome security disclosure. ServiceNow warned that a vulnerability had been exploited to gain unauthorised access to customer instances. A security update was deployed on June 5, and affected clients were notified. For a company that manages mission-critical business operations, such incidents carry weight — even if the response was swift and professional.
Should investors sell immediately? Or is it worth buying ServiceNow?
On the product front, ServiceNow released “EmployeeWorks” in June. The new module gives firms greater control over the employee experience and introduces AI preference settings, such as how artificial intelligence is used in task overviews and employee queries. It is not a breakthrough, but it reinforces the strategy to embed AI deeply into every workflow.
Despite the share price weakness, analysts remain broadly optimistic. The consensus price target stands at €123.82 — implying upside of nearly 47% from Friday’s level. Benchmark lifted its own target to $130 on June 15, with analyst Yi Fu Lee citing growth prospects from AI after a meeting with management. The stock’s relative strength index sits at 43, neither overbought nor oversold, while its 30-day annualised volatility of nearly 79% underscores the turbulence.
Operationally, the company continues to deliver. Subscription revenue jumped 19% in the first quarter, and management expects full-year revenue of almost $15.8 billion, representing growth of over 22%. The market is waiting for a catalyst to confirm the narrative — and the next major test comes on July 21, when ServiceNow reports second-quarter results. A strong outlook could halt the downward drift; a miss would likely push the stock back towards recent lows.
For now, ServiceNow is betting that a combination of cost discipline, deeper partnerships and a refocused platform story will convince investors that its AI transformation is more than a promise. The proof, however, is still in the numbers.
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