By Jacob Sonenshine
The market fears Accenture will be harmed by artificial intelligence. It's more likely to benefit.
Shares of the $110 billion consulting company are down 33% this year, largely over AI-related concerns. As tools developed by Anthropic and OpenAI proliferate, fears grow that all sorts of business services and software companies will be displaced. Adding to this, OpenAI last month announced the acquisition of Tomoro as part of a $4 billion push into consulting and engineering.
These concerns are likely misplaced. Yes, AI tools are disrupting some areas of business operations, but they can't disrupt everything. A perfect example: Cybersecurity stocks have rebounded quickly from their lows as the market has appreciated that Anthropic's cyber offering, Mythos, can't take meaningful market share from the cyber software providers soon.
Accenture is positioned to continue its leadership in this space, and could even enjoy a tailwind from AI as companies implement the new tools.
First off, OpenAI's venture likely won't steal Accenture's lunch. The consulting company has close to 800,000 employees, according to its most recent 10-K filling. Many of them are engineers. OpenAI now has a grand total of 150 engineers through Tomoro. Accenture simply has the supply needed and the knowledge and customer relationships it has built since its founding in 1989 to serve its thousands of global customers across the majority of sectors.
OpenAI "likely doesn't offer the same delivery capacity, global footprint, or operational infrastructure required to execute complex multiyear AI programs independently," writes UBS analyst Kevin McVeigh.
In fact, AI might drive some growth for Accenture as companies lean on the consultancy for its services -- including help with AI deployment itself. McVeigh says the company was recently on pace to see a greater than twofold increase in bookings for customers that are using a partnership between Accenture and other companies such as Anthropic, the maker of Claude.
He isn't the only one noticing the trend. "AI is now central to nearly all client work, driving cloud, data, security, and operating model transformations, and the company is seeing more momentum behind AI workloads moving from proof of concept to production," writes William Blair analyst Maggie Nolan.
This narrative can quickly emerge to replace the doom-and-gloom scenario just as it did with software. Accenture's sales figures should bear this out.
The company generated about 8.5% annual revenue growth in the past decade to $69.7 billion last year, partly from a gradual increase of the hourly rate it charges customers. In this year's second-quarter earnings release, which boasted better-than-expected sales and profits, CEO Julie Sweet said the firm took market share. Looking ahead, analysts expect nearly 8% annual sales growth to $94.3 billion by 2029, according to FactSet, with higher-priced AI implementation offerings part of the picture.
That can drive robust earnings growth. Sure, the company has to meet any growing demand with more engineers who are often paid handsomely, but other costs -- research and development, marketing -- aren't expected to grow as quickly as sales. That's partly why the operating profit margin can expand, just as it has the past decade, and why analysts see almost 10% annual earnings growth.
This picture could become a little clearer when Accenture reports third-quarter earnings the morning of June 18. The market just wants to see some evidence that this story is indeed unfolding. Encouragingly, shares are up 12% from 2026 lows.
The best news is that shares are still cheap, so solid earnings reports could catalyze more gains. The stock trades at just over 12 times forward earnings, versus the S&P 500's just over 21 times. It has often traded above the index, with a peak in the past year of almost 24 times.
The point: Accenture is likely worth much greater than 12 times earnings, so a higher multiple plus rising profits can easily cause this name to jump.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
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(END) Dow Jones Newswires
June 05, 2026 21:30 ET (01:30 GMT)
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