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

By Prathik Jayaprakash

Oct 1 (Reuters) - Accenture shares ‌surged 22%, 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% and IBM about 3%. US-listed shares of Indian rivals Wipro and Infosys also rose between 6% and 7%.

"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.

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% and 6% in fiscal 2027, the midpoint of which is above analysts' average estimate of a 3.9% 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% to $22.17 billion. Consulting revenue grew 7% 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.

(Reporting by Prathik Jayaprakash, Tharuniyaa Lakshmi and Anhata Rooprai in Bengaluru, additional reporting by Shashwat Chauhan; Editing by ‌Sahal Muhammed)

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