Despite posting seemingly strong fiscal third-quarter results, Accenture (ACN) shares fell by 17.97% on Thursday. The consulting firm’s massive expansion in cybersecurity failed to impress investors.
Accenture is taking a majority stake in Dragos. It will also acquire all of runZero and NetRise. The total enterprise value is $4.2 billion. The bad news is that investors would rather own Palo Alto Networks (PANW) or CrowdStrike (CRWD) for exposure to the hot cybersecurity industry.
In Q3, Accenture’s EPS of $3.80 beat expectations. Revenue grew by 5.6% Y/Y to $18.7 billion. The firm disappointed investors with its full-year revenue growth forecast of just 3% to 4% (local currency). In the last decade, the firm’s EPS, revenue, and free cash flow more than doubled. Yet the share price is the same as it was in 2017.
Risks
The consulting model is broken, so stock markets are selling off ACN stock. They are also dumping Gartner (IT) and S&P Global (SPGI). Firms have hundreds of thousands of workers providing work that inexpensive chatbots offer. Even though OpenAI, Microsoft’s (MSFT) CoPilot, and Anthropic offer cheap AI work, customers may save more. China’s DeepSeek will charge a fraction of that demanded by U.S. AI suppliers.
Accenture is a value trap. Investors should expect the downtrend in shares to continue as AI shakes up the consulting industry.
Tech Insider
