How Accenture’s (ACN) AI Transition Stacks Up to Its Competition

Accenture (ACN) is positioning itself as a trusted guide for enterprises navigating the transition to AI, layered on top of its broader consulting portfolio. The strategy itself is straightforward. What’s less clear is how well Accenture is executing it internally. With client spending decisions being pushed out and budgets under pressure, the firm’s own AI transition appears to be moving more slowly than the narrative it presents to investors.

Market critics can be forgiven for thinking of the old adage—“do as I say, not as I do”—and then questioning why Accenture’s internal AI adoption seems to lag the pace it encourages in clients. Against that backdrop, it’s worth examining how Accenture is actually performing, what that execution signals for peers like Infosys (INFY) and Cognizant (CTSH), and why—despite a valuation that appears reasonable on the surface—I remain neutral on the stock.

A Beat That Exposed the Cracks

Accenture delivered its Q1 results for fiscal 2026 last Thursday, and at first glance, the quarter appeared to be relatively strong. New bookings reached about $21 billion, up 12% year-on-year, and AI work is being embedded across consulting and managed services. Yet, management did not change the full-year outlook, sticking with revenue growth of 2% to 5% and only modest EPS gains.

The near-term picture was not especially encouraging either, with FQ2 revenue projected between $17.35 billion and $18 billion, slightly below the consensus of $17.78 billion. For a company you would think to be a beneficiary of the current AI wave, that kind of flat guidance feels like an acknowledgement that growth remains boxed in.

The earnings call felt equally underwhelming. CEO Julie Sweet described demand as “largely unchanged,” with clients willing to fund big reinvention programmes but keeping a tight lid on smaller discretionary work. US federal IT cuts and tariff-driven supply-chain friction are slowing the conversion of pilots into rollouts across the public sector and industry.

Inside Accenture, the shift to AI is also colliding with its own transformation. In recent months, the firm has cut more than 11,000 roles, reducing headcount to about 779,000 as part of an $865 million restructuring. Management talks about upskilling at scale, but I get the impression that those who cannot move into AI- or cloud-centric roles will be exited. Such upheaval may help margins over the long term, but in the near term, it raises the risk of project delays, which could further pressure growthin the coming quarters.

When the Bellwether Starts Pulling Others Down

As a bellwether, Accenture tends to set the tone for the rest of the sector, so when its stock struggles, it is usually telling you something. The recent slide has not been uniform across peers. Still, the industry overall has lagged behind the overall market.

Infosys is slightly down year over year, while Cognizant is up only in the mid-single digits, and Accenture is down 23% over the same stretch. I believe the industry is positioned to continue to underperform, and Accenture’s struggling share price should be interpreted as a more meaningful signal than the market currently acknowledges.

Infosys’s latest guidance makes the same point. Along with sharing its FQ2 results, the company only slightly raised its fiscal 2026 top-line outlook, pointing to 2%-3% growth on a constant-currency basis. That is a modest number by Infosys standards. Management has been open about the fact that volumes have yet to recover, with most of the progress coming from pricing, while discretionary tech spend in areas like manufacturing and retail remains weak.

Cognizant’s topline looks better, yet the themes rhyme. Its Q3 revenue of about $5.4 billion grew at a not-so-impressive 6–7% in constant currency, and full-year guidance was set to a similar range, with adjusted margins at just 16%. Also, management noted that demand remains centred on cost takeout and vendor consolidation. Most AI engagements are positioned as productivity and efficiency programmes, which essentially means doing the same work with fewer people or suppliers. That implies Cognizant, much like Accenture, is riding a wave of defensive IT spend and not really a genuine, growth-led AI cycle.

Valuation in an Awkward Transition

All of this feeds into a valuation that offers limited room for error. At ~$270 a share, Accenture trades at roughly 20x the midpoint of its fiscal-2026 adjusted EPS guidance range of $13.52 to $13.90. On its own, the valuation does not look extreme. The issue is the type of business it is associated with. A company this exposed to corporate tech spending and only expecting low single-digit revenue growth is being asked to live up to a lot. The market is effectively betting that the shift toward AI will steady margins and restart earnings growth, but so far, the transition looks slow, and the demand backdrop remains murky.

In general, I believe the challenge is that AI is totally changing how consulting makes money. A lot of the work that used to keep large junior teams busy is getting automated away. Analysis and documentation are no longer as labor-intensive as they once were. In turn, this shifts the balance for firms like Accenture. So, increasingly, they are looking for solutions built by cloud vendors and model providers instead of doing the work themselves. The value sits elsewhere now, in platforms and IP, not in time billed. That naturally favors smaller teams and makes pricing conversations more uncomfortable.

Accenture is spending and restructuring to get ahead of that shift, with billions for AI-centric acquisitions and tooling, tens of thousands of AI and data specialists, and mass generative-AI training. Over time, that could indeed re-anchor the story around higher-margin, IP-rich work. For now, though, the company is carrying a legacy cost base into a world that wants automation and outcome-based fees, which makes the current multiple look exposed.

Is ACN a Good Stock to Buy Now?

On Wall Street, ACN stock features a Moderate Buy consensus rating, based on 13 Buy and seven Hold ratings. No analyst rates the stock a Sell. Also, Acceture’s average stock price target of $297.58 implies ~9% upside potential over the course of 2026, with analysts remaining somewhat optimistic despite the recent challenges.

See more ACN analyst ratings

Accenture’s AI Pivot Suggests Real Demand With an Uneven Payoff

Accenture is not fundamentally broken, but it is still early in what is shaping up to be a challenging transition. Demand for AI-related work is real, yet it is altering the economics of consulting faster than revenue growth can absorb. Until client spending recovers and execution becomes more consistent, the stock may continue to lag. Industry peers, despite somewhat stronger recent performance, are likely to face similar pressures as the same structural forces work their way through the sector.