Accenture Stock Declines 32% YTD: Here's How to Play It Now

Accenture ACN shares have lost 31.5% in the year-to-date period compared with the 16.5% decline of its industry and the 12.2% rise in the Zacks S&P 500 Composite.

YTD Price Performance

Investors may find the decrease in this stock price appealing since it presents an opportunity to invest in a relatively cheaper stock and book higher returns. However, a hasty approach may end up in losses. Hence, we have analyzed this stock to find out whether investors should buy this stock, hold it for now, or sell it immediately.

ACN’s GenAI Services Act as Primary Growth Contributor

Accenture’s decision in fiscal 2023 to become the leader in GenAI with a $3-billion multiyear investment is bearing its fruits as the company is succeeding in attracting more clients. The company is witnessing tangible results, wherein the top line has tripled over fiscal 2024 due to GenAI. Moreover, GenAI bookings have nearly grown 2X to $5.9 billion.

The company is finding itself amid partnerships with tech giants with a modus operandi to enhance its AI offerings. Partnership with Google Cloud is aiding Accenture to create an agentic platform that supplies Google AI’s full power to employees and workflow.

Accenture has also collaborated with Microsoft to develop advanced GenAI-backed cyber solutions. These solutions are created to mitigate risks while ensuring prudent operational cost management.

We are bullish on Accenture’s Reinvention Services, which was effective from September of this year. Our optimistic expectations tie in with the early success of this reorganization, where nearly 80% of its large deals encompass multi-AI-enabled services. With AI Refinery coming into play, ACN is equipped to address industry-specific problems, leveraging a network of AI agents, making it the primary growth contributor.

Accenture’s Robust Liquidity Position

In the fourth quarter of fiscal 2025, the company’s current ratio of 1.42 underperformed the industry average of 2.12. However, due to an upsurge in cash reserve, the metric improved from the year-ago quarter’s 1.1. With a current ratio exceeding 1, we expect Accenture to cover its short-term obligations effectively.

ACN’s Impressive Top & Bottom-Line Prospects

The Zacks Consensus Estimate for Accenture’s fiscal 2026 revenues is pegged at $73.7 billion, implying 5.8% year-over-year growth. The consensus estimate for fiscal 2027 revenues is pinned at $78.4 billion, suggesting 6.3% year-over-year growth.

The consensus estimate for ACN’s fiscal 2026 earnings is set at $13.74 per share, indicating a 6.3% year-over-year rise. For fiscal 2027, the bottom-line estimate is at $14.78 per share, hinting at 7.6% year-over-year growth.

Rapid Talent Rotation: Is ACN Misjudging Its Human Capital?

Accenture anticipates incurring nearly $865 million as of the first quarter of fiscal 2026 for its 6-month business optimization program. One of the facets of this program is related to rapid talent rotation, which highlights severance associated with headcount reductions that the company is making in a compressed timeline. Despite the company’s claims to promote cost savings, rapid talent rotation indicates that ACN has misjudged the speed of the required skills transformation.

This optimization program may appear as a large-scale layoff that may negatively impact employee morale. An increasing attrition rate may compel productive employees to seek positions in other companies, hampering Accenture’s overall productivity.

Accenture Shoulders Highly Competitive Pressure

International Business Machines IBM and Capgemini CGEMY put significant competitive pressure on Accenture. International Business Machines’ proprietary technology, Red Hat, and Watson offer clients a tech stack and services solution that competes with Accenture’s multi-ecosystem partners. International Business Machines’ aggressive investments to recruit and retain top AI talent challenge Accenture’s ability to sustain its AI leadership.

Capgemini’s strong presence in the European market compels Accenture to expand its resources, which involves significant investments, affecting growth and profitability. Accenture’s leadership in end-to-end digital solutions is challenged by Capgemini’s deep expertise in digital transformation, engineering and cloud services.

Be Patient & Hold on to ACN

GenAI services are appearing to become Accenture’s primary growth catalyst for the long haul. Partnerships with tech giants and initiatives to improve AI deployment will aid the company in its path to success. Having said that, ACN holds a robust liquidity position that effectively covers its short-term obligations. Strong top and bottom-line prospects make the stock favorable for investing.

However, the negative impacts of Accenture’s business optimization program on its workforce and fierce competitive pressure compel us to recommend that investors who already hold this stock refrain from buying additional units. Potential investors are asked to monitor Accenture’s ability to sail through the AI wave before making any move.

Accenture carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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