Accenture, a prominent management consulting and technology services company, experienced a significant surge in its stock price on Thursday following the release of its fiscal third-quarter earnings report. The company reported robust financial results driven by strong demand for its artificial intelligence (AI) solutions and other digital transformation services.
In the third quarter, Accenture achieved new bookings totaling $21.1 billion, representing a substantial 22% increase compared to the same period last year. Notably, generative AI bookings alone exceeded $900 million, underscoring the growing importance and adoption of AI technologies in various industries.
CEO Julie Sweet highlighted these achievements, emphasizing that Accenture reached two significant milestones during the quarter: surpassing $2 billion in generative AI sales year-to-date and generating $500 million in revenue year-to-date from AI-related initiatives. These milestones underscore Accenture’s leadership and early success in leveraging AI to drive innovation and business growth for its clients.
From a financial standpoint, Accenture reported adjusted earnings of $3.13 per share on revenue of $16.47 billion for the third quarter. While these earnings slightly missed analysts’ expectations of $3.16 per share on revenue of $16.56 billion, the strong performance in new bookings and AI-related revenue signaled robust underlying business momentum.
Despite revising down its fiscal 2024 earnings estimate to a range of $11.85 to $12 per share (from a previous range of $11.97 to $12.20 per share), Accenture maintained confidence in its revenue growth outlook. The company now expects revenue to grow between 1.5% and 2.5% for fiscal 2024, compared to earlier projections of 1% to 3% growth. This adjustment reflects cautious optimism amid global economic uncertainties and evolving market conditions.
Investors responded positively to Accenture’s earnings report, driving its stock price up by 6.8% to $304.55 per share on Thursday. This marked the largest single-day percentage gain for Accenture since March 23, 2023, despite a year-to-date decline of 13%. The stock’s performance also positioned Accenture as the second-best performer in the S&P 500 index on that day, underscoring investor confidence in the company’s long-term growth prospects.
Analysts, including David Togut from Evercore ISI, maintained an optimistic outlook on Accenture’s stock, reiterating an Outperform rating with a price target of $375. Togut emphasized Accenture’s strong market position in digital transformation, cloud computing, generative AI, and cybersecurity services. He highlighted the company’s potential for sustainable market share gains and modest margin expansion, factors that continue to attract investor interest despite the revised earnings guidance.
Looking ahead, Accenture remains focused on expanding its capabilities in AI, cloud services, and digital technologies to meet increasing client demand for innovative solutions. The company’s strategic investments and emphasis on emerging technologies position it favorably to capitalize on evolving market trends and drive future growth in the competitive landscape of global consulting and technology services.