IT-services stocks plunge on AI fears as Accenture suffers record drop

EarningsIndustry Impact 4
โดย The Motley Fool·Read original
Summary · why it matters

Shares of Accenture cratered about 18% on June 18, its worst single-day drop on record, after the consulting giant trimmed its full-year revenue growth outlook to 3% to 4% in local currency from a prior range of 3% to 5%. EPAM Systems slid about 9% the same day without reporting its own results, while Cognizant fell about 10% to a 52-week low, and IBM slipped about 5%. The sell-off was driven by fears that artificial intelligence could structurally shrink demand for IT services, even though Accenture posted a solid fiscal third quarter with revenue up 6% to $18.7 billion and earnings per share up 9%, and Cognizant reported a 21% jump in first-quarter bookings. Accenture CEO Julie Sweet said AI will be a tailwind for the industry, but the market remains skeptical, with Accenture trading at about 10 times earnings, EPAM at about 11 times earnings, and Cognizant at around 9 times earnings. IBM, which derives only about a third of its revenue from consulting and saw software revenue rise 11% to $7.1 billion last quarter, commands a higher valuation of about 22 times earnings, reflecting investor confidence in its recurring software and hardware base.

Impact on stocks 5

Artificial Intelligence▼ · 5 stocks
Accenture plc
ACN
▼ NegativeDemandrelevance

Accenture cut its full-year revenue growth outlook to 3%-4% from 3%-5%, triggering a record 18% drop on AI-driven demand fears.

EPAM Systems Inc
EPAM
▼ NegativeDemandrelevance

EPAM slid 9% without its own results, dragged by sector-wide AI-driven demand concerns.

International Business Machines
IBM
▼ NegativeDemandrelevance

IBM slipped 5% as part of the IT services sell-off on AI fears, though its consulting revenue is only a third of total.

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