Updated Version 2-Update 2-Accenture's forecast alleviates disruption concerns caused by artificial intelligence, boosting battered IT service stocks

Additional analyst commentary

Prathik Jayaprakash

Reuters, October 1 - Accenture (ACN.N) shares soared 22%, on track for their largest single-day increase in history. The company delivered an annual revenue growth forecast that beat expectations, highlighting the resilience of its IT consulting business, which had previously suffered due to concerns over disruptive artificial intelligence transformation.

This outlook shows that global consulting firms are actively capitalizing on strong corporate demand, as companies look for external tech partners to automate complex tasks and support AI adoption—driving previously sluggish peers' stocks higher.

Cognizant (CTSH.O) shares rose about 8%, IBM (IBM.N) was up roughly 3%. Shares of Indian rivals Wipro (WIPR.NS) and Infosys (INFY.NS) listed in the U.S. also gained by 6% to 7%.

“Many organizations believe they have underinvested in software. This is clearly the case for Accenture, and investors are rapidly reassessing their view of the company,” said Interactive Brokers chief market analyst Steve Sosnick.

Software stocks have mostly recovered from a sell-off earlier this year. That decline began when Anthropic launched new tools that stirred concerns AI could replace products and services these firms offer.

However, IT services companies lagged behind. Until Thursday, Accenture’s stock had fallen by about a third this year.

Nevertheless, Accenture said that pricing in many of its areas was lower this quarter, suggesting the industry is feeling pressure as clients seek a share of the cost savings generated by AI.

According to data compiled by the London Stock Exchange Group (LSEG), the company expects fiscal year 2027 annual revenue to rise by 3% to 6%, with the median of that range above analysts’ average estimate of 3.9%.

Chief Executive Officer Julie Sweet said on the earnings call that Accenture expects “based on the opportunities we see today, to invest around $5 billion through acquisitions in fiscal year 2027 to accelerate our growth strategy”.

In June this year, Accenture announced three cybersecurity deals totaling $4.18 billion, including a controlling investment in Dragos.

The company’s fourth quarter order volume increased by 4% to $22.17 billion. Consulting revenue grew 7% to $9.28 billion, pushing total sales to $18.68 billion, ahead of the $18.03 billion forecast.

In September, Accenture partnered with soon-to-be public (link) Anthropic to independently assess the latter’s frontier AI model; both sides pledged to invest at least $1 billion each over five years (link) to expand AI safety and testing capabilities.

(For the convenience of non-English speakers, Reuters has automatically translated its report into several other languages. Because automated translation may contain errors or lack necessary context, Reuters does not guarantee the accuracy of the automated translation text and provides it solely to assist readers. Reuters is not liable for any injury or loss arising from use of the automated translation feature.)