Accenture, a leading IT services provider, reported stronger-than-expected third-quarter results on Thursday and raised its full-year revenue growth forecast on the back of growing demand for artificial intelligence (AI) services. The company's shares rose more than 6% in premarket trading after having fallen about 19% this year due to market concerns over subdued IT services demand caused by economic uncertainty and elevated interest rates.
Accenture has been a go-to consultant and outsourcing service provider for businesses migrating their operations to the cloud, which has partially shielded the company from enterprise budget cuts. The adoption of AI technologies is helping companies automate certain operations, boost productivity, and save costs. According to reports, Accenture's new bookings for GenAI services totaled over $2 billion for the full year.
The company reported third-quarter revenue of $16.47 billion and a profit of $1.93 billion, missing estimates of $16.53 billion and $2.01 billion, respectively.
Accenture expects annual revenue to grow between 1.5% and 2.5%, compared with analysts' expectations of 1.6%. The company had earlier forecast growth of 1% to 3%, but on Thursday flagged a negative foreign-exchange impact of 0.7% for the fiscal year ending August.
Despite the overall economic uncertainty, Accenture's strong outsourcing bookings suggest that demand for big transformation projects remains intact. Jefferies analyst Surinder Thind noted, “While overall near-term demand remains weak, it does not appear to be deteriorating.”
Accenture is not the only IT services provider experiencing growth in AI services. Other major players like IBM and Microsoft have also reported strong demand for their AI offerings. The increasing adoption of AI technologies is expected to continue driving revenue growth for IT services providers in the coming years.
It's important to note that while Accenture's results are promising, investors should remain cautious and consider the potential risks associated with economic uncertainty and elevated interest rates. Additionally, it's essential to keep in mind that major breakthroughs or advances in AI technologies are rare and should be met with a healthy dose of skepticism until proven otherwise.
Sources:
- Reuters
- The Globe and Mail
- Finance Yahoo
