Can NOW's Tech Mahindra Deal Boost Its AI Edge Over CRM & MSFT?

ServiceNow NOW and Tech Mahindra expanded their multi-year partnership on Aug. 20 to help enterprises move Artificial Intelligence (AI) initiatives from pilot programs to production-scale deployments. The collaboration combines the company’s AI Platform with Tech Mahindra’s industry, engineering and implementation expertise to accelerate automation, strengthen AI governance and deliver measurable business outcomes. The partnership targets manufacturing, telecommunications, banking, financial services and insurance, media and technology, strengthening NOW’s competitive positioning against Salesforce CRM and Microsoft MSFT in enterprise AI.

The expanded partnership is expected to help ServiceNow accelerate enterprise AI adoption by giving customers repeatable deployment frameworks rather than standalone AI tools. Tech Mahindra plans to significantly expand its global ServiceNow practice and establish an AI and Innovation Center of Excellence focused on capabilities such as AI Control Tower and EmployeeWorks. Tech Mahindra’s existing ServiceNow environment already handles more than 100,000 cases per month across 90 countries, highlighting the scalability of the approach.

The partnership is also poised to strengthen NOW’s AI monetization and cross-selling opportunities. ServiceNow AI surpassed $1 billion in annual contract value (ACV) in the second quarter of 2026. Deals containing five or more ServiceNow AI products grew 5.5 times year over year, contributing to a tripling of $1-million-plus deals. First-time Agentic AI buyer deal volume increased more than 45%, while upgrades to AI-native SKUs are generating price uplift within the company’s 20-30% framework.

AI governance represents another important growth opportunity. ServiceNow’s AI Control Tower can discover, observe, govern, secure and measure AI systems, agents and workflows. Its expanded discovery capabilities include 30 new enterprise integrations spanning AWS, Google Cloud and Microsoft Azure, along with applications such as SAP, Oracle and Workday. This strengthens NOW’s ability to provide centralized visibility across heterogeneous enterprise AI environments. The broader ServiceNow AI Platform can connect across clouds, models and data sources, while more than 100 billion workflows run on the platform annually. Tech Mahindra’s implementation capabilities could help broaden adoption of NOW’s security, risk, IT operations and data solutions.

The collaboration strengthens ServiceNow’s ability to demonstrate tangible returns from enterprise AI investments. Tech Mahindra has used ServiceNow to generate cost benefits, improve experiences for 150,000 employees and optimize first-level IT support by roughly 25%. With ServiceNow targeting AI to contribute 30% of ACV by 2030, broader production deployments could support subscription growth, larger commitments and increased wallet share.

NOW Faces Tough Competition

Salesforce is expanding Agentforce across Customer 360 and is challenging NOW directly in IT service management. Agentforce annual recurring revenues (ARR) surpassed $1 billion in the first quarter of fiscal 2027, while combined Agentforce and Data 360 ARR reached $3.4 billion. Half of Agentforce and Data 360 bookings came from existing customers expanding commitments. McAfee selected Agentforce IT Service to replace ServiceNow, while PenFed expects its Agent Wingman to save nearly $1.6 million annually, reduce call-handle time by 10% and cut after-call work by 50%.

Microsoft is increasing competitive pressure through Azure AI Foundry, Microsoft 365 Copilot and Agent 365. Agent 365 had nearly 40 million registered agents across tens of thousands of companies shortly after launch, while Microsoft 365 Copilot surpassed 30 million paid seats. National Health Service England is deploying Copilot to 505,000 clinicians and staff after a trial showed average time savings of 43 minutes per employee per day. Microsoft is deploying 6,000 industry and engineering experts through Frontier to help customers convert AI projects into measurable outcomes.

NOW’s Share Price Performance, Valuation & Estimates

Image Source: Zacks Investment Research

Shares of ServiceNow have declined 15.6% year to date against the broader Zacks Computer and Technology sector’s 15.7% growth.

NOW’s Stock Price Performance

Image Source: Zacks Investment Research

NOW stock is trading at a premium, with a forward 12-month price/earnings ratio of 27.60X compared with the broader sector’s 20.90X. ServiceNow has a Value Score of D.

NOW’s Valuation

The Zacks Consensus Estimate for NOW’s 2026 earnings is currently pegged at $1.03 per share, down by a cent over the past 30 days, suggesting 7.29% year-over-year growth.

ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

ServiceNow currently carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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