Kyndryl, Accenture, Wipro, Infosys stocks fly as tech demand rises

By:
on Jan 15, 2024
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  • IT consulting companies are doing well as demand bounces back.
  • Most consulting stocks like Accenture and Infosys have surged recently.
  • Wipro and Infosys published stronger results than expected.

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Consultants are back in business as demand for IT spending jumps. Kyndryl (KD) stock price has surged to its highest point since November 2021 after jumping by over 169% from its lowest point in 2022. This surge has brought the market value of the IBM spin off to over $4.8 billion.

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Kyndryl, Wipro, Infosys

Wipro vs Infosys vs Accenture vs Kyndryl stocks

Wipro stock flies after earnings

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Similarly, Wipro, the Indian tech firm, has risen to INR 525 on Monday, its highest point since May 2022. It has jumped by 40% from its 2023 low. Infosys, the giant Indian company, has also soared to 1,679 INR while Accenture shares are up to $358, their highest point since January 2022.

The surge of IT consulting stocks is a good reversal after the plunge in the past few years as global central banks hiked rates and as inflation jumped. This macro environment led to a cut of technology investments 2023. Companies, including large conglomerates like Microsoft, Meta Platforms, and Goldman Sachs laid off thousands of workers.

There are signs that IT spending is bouncing back as companies embrace technology services like Artificial Intelligence (AI). This is evidenced by the recent corporate earnings by these consulting giants.

On Friday, Wipro said that its performance was better than expected. Its revenue in the fourth quarter dropped by 12% to $320 million while revenue slipped by 4%. The management noted that its growth was growing.

Infosys also published strong financial results last week. Its revenue retreated by 1% while its operating margins slipped slightly to 20.5%. Talking about the environment, the company’s CFO said:

“Clients are looking at conserving cash, which is visible in delayed decision-making and project deferrals. Our focus on large and mega deals resulted in healthy pipeline and deal wins.”

Accenture is growing through acquisitions

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Accenture also published mixed results in December, leading to an upgrade from Baird. Its bookings jumped by 12% to $18.4 billion while its revenue came in at $16.2 billion at the upper side of guidance.

Accenture has also been highly acquisitive recently. In the last quarter, the company spent $788 million in acquisitions. It has continued with these buyouts recently. Last week, it bought Work & Co and Navisite. Before that, it acquired SirfinPA and Jixie.

In November, Kyndryl Holdings said that its revenue came in at $4.07 billion as consulting income rose by 17%. Its combined EBITDA grew by 34% to $574 million while its pre-tax income rose to $25 million.

Analysts believe that IT spending will start to go up this year as inflation and interest rates pull back. There are also signs that mergers and acquisitions (M&A) are growing, signaling potential upside. Companies are also expected to report strong earnings this year. FactSet estimates that earnings growth will be over 11% this year, higher than in 2023. Meanwhile, in a recent statement, Gartner estimated that worldwide IT spending will rise by 8% in 2024 to $4.1 trillion.

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