Pegasystems Bets on GenAI Momentum: Will AWS Partnership Pay Off?

Pegasystems PEGA is capitalizing on the momentum of its generative AI (Gen AI) strategy, with its AI-powered, low-code tool “Pega Blueprint” emerging as a core driver of enterprise modernization. Generating over 1,000 new Blueprints weekly, the platform is helping clients modernize faster and close deals more efficiently, underscoring the company’s growing influence in the rapidly evolving automation landscape.

The latest five-year strategic collaboration with Amazon Web Services (AWS), aimed at legacy system modernization, is expected to help PEGA sustain this momentum. Central to this alliance is the integration of Amazon Bedrock into the Pega Blueprint and Pega Platform, enabling clients to securely leverage top-tier large language models like those from Anthropic, Cohere and Meta Platforms. These Gen AI models improve the entire application lifecycle from design to refinement while preserving enterprise-grade security and compliance.

A recent survey by Pegasystems and Savanta revealed that 68% of IT decision-makers cite outdated legacy systems as a major roadblock to AI and automation adoption. The AWS tie-up directly addresses this challenge, integrating AWS Transform’s agentic AI workflows with PEGA’s cloud-native applications. The collaboration aims to significantly reduce modernization timelines, lower costs and simplify cloud migration.

The introduction of Pega-as-a-Service on AWS Marketplace streamlines procurement and implementation, providing clients with financial flexibility and faster time to value. For Pegasystems, this move not only expands its recurring revenue model but also signals a firm commitment to helping enterprises modernize at scale through intelligent, AI-driven transformation.

PEGA Faces Stiff Competition

Microsoft MSFT challenges Pegasystems with its Power Platform and Azure, offering low-code tools and deep ecosystem integration. Microsoft’s dominance in cloud services, AI innovation and diverse revenue streams ensures strong cash flow. While PEGA targets complex legacy transformations with GenAI Blueprint, Microsoft stands out for its accessibility, scalability and seamless enterprise cohesion, making it a broader and more user-friendly automation solution for modern digital workflows.

ServiceNow NOW competes directly with Pegasystems in workflow and process automation, particularly within ITSM enterprise-wide operations. ServiceNow’s AI-powered Core Business Suite, launched in May 2025, streamlines workflows across HR, finance and legal. A strong partner ecosystem, including Amazon, Microsoft and NVIDIA, further enhances scalability and integration. ServiceNow’s growing GenAI tools and client base are boosting its revenues through smart automation and efficient enterprise solutions.

PEGA’s Price Performance, Valuation & Estimates

Pegasystems’ shares have gained 8.2% year to date, while the broader Zacks Computer and Technology sector has returned 7.4% and the Computer-Software industry has risen 16.8%.

PEGA YTD Price Return Performance

PEGA has a Value Score of F. It is currently trading at a forward 12-month price-to-earnings ratio of 25.93X compared to the industry’s 34.25X.

PEGA Forward 12-Month P/E Ratio

The Zacks Consensus Estimate for PEGA’s earnings is pegged at $1.88 per share for 2025, indicating year-over-year growth of 24.5%. The 2025 earnings estimate has been revised upward by 13.9% over the past 60 days.

PEGA stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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