CGI Inc. (GIB): A Bull Case Theory

We came across a bullish thesis on CGI Inc. on Beat the TSX (BTSX-20)’s Substack by Beat the TSX-27 Strategy.. In this article, we will summarize the bulls’ thesis on GIB. CGI Inc.'s share was trading at $88.53 as of November 28th. GIB’s trailing and forward P/E were 16.92 and 13.93 respectively according to Yahoo Finance.

CGI Inc. provides information technology and business process services in Western and Southern Europe, the United States, Canada, Scandinavia, Northwest and Central-East Europe, the United Kingdom, Australia, Germany, Finland, Poland, Baltics, and the Asia Pacific. GIB delivered a strong Q4/25 performance, demonstrating the steady execution and disciplined capital allocation that define its long-term compounding model.

Revenue rose 9.7% year-over-year, while adjusted EPS increased 10.9%, highlighting the company’s ability to grow profitably even as IFRS margins were temporarily distorted by restructuring costs. Bookings were particularly robust at $4.79 billion, translating to a 119% book-to-bill ratio, underscoring sustained client demand and the growing impact of AI-embedded managed services. The backlog reached $31.45 billion, equal to two years of revenue, providing a clear line of sight to growth over the next 24–36 months.

Management’s disciplined approach—combining backlog, strategic M&A of $1.8 billion, and aggressive buybacks totaling $1.275 billion—continued to deliver shareholder value. The company also raised its dividend by 13%, signaling confidence in future cash flows. AI and managed services remain the primary growth engine, driving efficiencies, higher-margin work, and client renewals. Margins are normalizing now that restructuring is complete, while free cash flow remains elite at 16.5% of revenue. Despite market headwinds and short-term perception challenges, CGI maintains a high-quality recurring revenue base, deep client relationships, and a systematic M&A strategy that has historically proven accretive.

Valuation metrics, including a PE ratio of 16—levels last seen in 2014 and 2020—combined with a 13.6% return on invested capital, suggest the stock is attractively priced relative to its long-term potential. With a strong balance sheet, predictable cash generation, and ongoing buybacks, CGI represents a classic BTSX-27 compounder. The company’s consistent execution and resilient business model make it a compelling buy-to-equal-weight opportunity, offering limited downside and significant upside should AI adoption further accelerate its growth.

Previously we covered a bullish thesis on Accenture plc (NYSE:ACN) by Sanjiv in December 2024, which highlighted the company’s consulting scale, cloud and GenAI adoption, disciplined acquisitions, and steady free cash flow growth. The stock has depreciated approximately 29.81% since our coverage as the thesis didn’t fully play out. The thesis still stands. Beat the TSX-27 Strategy shares a similar perspective but emphasizes CGI’s AI-driven managed services, buybacks, and backlog growth.

CGI Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held GIB at the end of the second quarter which was 22 in the previous quarter. While we acknowledge the potential of GIB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.