Accenture's forecast eases AI disruption fears, lifts battered IT services stocks

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Oct 1 : Accenture shares surged 22 per cent, on track for their best day ever, after a stronger-than-anticipated annual revenue growth forecast underscored the resilience of the IT consulting business hammered by worries over AI-led disruption.

The outlook signaled how global consulting firms are tapping into robust demand from companies seeking external technology partners to automate complex tasks and to support AI adoption, sending the beaten-down shares of peers higher.

Cognizant rose about 8 per cent and IBM about 3 per cent. US-listed shares of Indian rivals Wipro and Infosys also rose between 6 per cent and 7 per cent.

"A lot of institutions feel they're underinvested in software. That was clearly the case with Accenture, and investors are quickly reevaluating their views on the company," said Steve Sosnick, chief market analyst at Interactive Brokers.

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Software stocks have largely recovered from a selloff early this year that began when Anthropic released new tools, fueling fears that AI could replace the products and services those companies sell.

But IT services firms have lagged, with Accenture's shares down about a third this year before Thursday.

Still, Accenture said its pricing was lower in many areas during the quarter, a sign of the pressures facing the industry as clients push for a part of the savings from AI.

The company expects annual revenue to grow between 3 per cent and 6 per cent in fiscal 2027, the midpoint of which is above analysts' average estimate of a 3.9 per cent growth, according to data compiled by LSEG.

CEO Julie Sweet said on a post-earnings call that Accenture expects to deploy "another approximately $5 billion in acquisitions in fiscal '27 based on the opportunities we see today to accelerate our growth strategy."

In June, Accenture had announced three cybersecurity deals totaling $4.18 billion, including a majority investment in Dragos.

Its fourth-quarter bookings rose 4 per cent to $22.17 billion. Consulting revenue grew 7 per cent to $9.28 billion, helping lift total sales to $18.68 billion, beating estimates of $18.03 billion.

In September, Accenture partnered with IPO-bound Anthropic to independently evaluate its frontier AI models, with the companies committing at least $1 billion each over five years to expand AI safety and testing capabilities.

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