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Industry Description
The Zacks Computers – IT Services industry comprises companies that provide consultancy, communications software and services, IT management and operations, cloud-based web development platform, customer relationship management, professional information solutions, real estate information and analysis, and outsourcing services. Industry participants cater to a wide array of end markets, including manufacturing, telecommunications, banking, insurance, healthcare, government agencies and public sector institutions. They focus on the cybersecurity business, the cloud computing market, generative AI, IoT and automation to bolster prospects. Offerings from industry participants help improve engagement with customers, launch products and support new business models, with enterprises going for digital transformation.
What's Shaping the Future of the Computers - IT Services Industry
Digitization Wave is a Tailwind: Most industry participants are modernizing their traditional legacy-oriented business processes to keep pace with evolving IT services. The aim is to integrate the coordination of emerging technologies, including cloud, IoT, AI and analytics. Increasing Internet penetration in emerging markets, particularly across the Asia Pacific, is another tailwind.
Hybrid Work Environment to Boost Prospects: The industry’s growth is expected to accelerate in the days ahead due to an increasing number of hybrid workers. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructures, which will enable them to provide flexible and easily adaptable hybrid solutions.
Improving IT Spending to Aid Prospects: Improving IT spending trends bode well for industry participants. Gartner projects IT spending to increase 9.8% over 2025’s estimated figure of $5.54 trillion to $6.08 trillion in 2026. Spending on IT services is expected to see an 8.7% improvement for 2026.
Zacks Industry Rank Indicates Bullish Prospects
The Zacks Computers - IT Services is housed within the broader Zacks Computer and Technology Sector. It currently carries a Zacks Industry Rank #99, which places it in the top 41% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Given the industry’s bullish prospects, there are several stocks worth buying. But before we present the stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags Sector and S&P 500
The Zacks Computers - IT Services Industry has underperformed the S&P 500 and the broader Zacks Computer and Technology sector in the past year.
The industry has declined 19.2% over this period compared with the S&P 500’s and the broader sector’s return of 15.2% and 19.6%, respectively.
Industry's Current Valuation
On the basis of the forward 12-month price/earnings, which is a commonly used multiple for valuing IT Services companies, the industry is currently trading at 24.4X, higher than the S&P 500’s 22.9X but lower than the sector’s 29.74X.
Over the past five years, the industry has traded as high as 34.45X and as low as 26.55X, with the median being 29.86X, as the charts below show.
3 IT Services Stocks to Buy Right Now
Vertiv: This Zacks Rank #2 (Buy) company’s shares have jumped 28.6% in the trailing 12-month period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Vertiv is benefiting from an extensive product portfolio, which spans thermal systems, liquid cooling, UPS, switchgear, busbar and modular solutions, which is noteworthy. The company is also benefiting from the accelerating digital transformation driven by AI and data center demand. Acquisitions are also playing an important role, with Great Lakes enhancing IT systems and white space solutions, and Weeleay boosting service capabilities through real-time machine data analysis and predictive actions.
The Zacks Consensus Estimate for VRT’s 2025 earnings is pegged at $4.11 per share, unchanged over the past 30 days. For 2026, the consensus mark for earnings is currently pegged at $5.21 per share, up a couple of cents over the past 30 days.
Cognizant: This Zacks Rank #2 company is benefiting from its investments in AI, which is driving expansion across enterprises. Cognizant’s focus lies on AI-led productivity, industrializing AI and agentifying the enterprise. AI-driven productivity is helping customers accelerate software development and lower costs. The launch of Cognizant Enterprise Vibe Coding Blueprint is helping clients develop AI fluency across their teams.
The Zacks Consensus Estimate for Cognizant’s 2025 earnings has remained unchanged at $5.25 per share over the past 30 days. For 2026, the consensus mark for earnings has been steady at $5.60 per share. Cognizant shares have returned 5.7% in a year.
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This article originally published on Zacks Investment Research (zacks.com).
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