Accenture’s Strong Earnings Bring Welcome Good News for Software Stocks 

Reports of Accenture’s demise in the face of AI may be greatly exaggerated. 

The professional services firm, which works with companies ranging from Verizon to McDonald’s, blew past expectations to report $3.29 earnings per share on $18.68 billion in its fourth quarter compared to the $3.18 a share on $18.03 billion analysts polled by FactSet forecasted. The stock of the company surged 16% on Thursday, not despite AI but because of it. 

Cup Half Full  

It’s certainly a tune change from a few months ago. When the IT consulting giant reported its third-quarter earnings in June, its revenue was weaker than expected and the forecast was disappointing. While the conflict in the Middle East had some of its customers pulling back on spending, the industry concerns were (you guessed it) AI. 

AI has been the bugaboo for consulting and software firms broadly for much of the last year. Their stocks have dropped as investors worry that robots will be able to take over many of the services that they provide. Accenture is still down 18% for the year while Capgemini has dropped 24% and Infosys, 37%. 

But Accenture’s CEO Julie Sweet doesn’t seem worried: 

• In a post-earnings call with analysts, she said that “large-scale reinventions” for clients, many of which were driven by AI, drove strong demand for the company during the quarter. “Much of our growth today comes from continuing to build their digital core, data foundations and the enterprise AI stack that they need to use AI at scale, and many are just starting their AI journey.” 
• Sweet said nearly 100 more clients kicked off their first advanced AI work with Accenture during the quarter, bringing its fiscal year-to-date total to more than 400.

Not So Fast: Accenture also recently got picked by one of the most prominent AI companies to … help slow down AI. Last month, Anthropic named Accenture an “embedded evaluator” that will help it implement safety checks regarding the technology’s development.