Cognizant Technology Solutions Corporation (CTSH): A Bull Case Theory

We came across a bullish thesis on Cognizant Technology Solutions Corporation on Quality Value Investing’s Substack by David J. Waldron. In this article, we will summarize the bulls’ thesis on CTSH. Cognizant Technology Solutions Corporation's share was trading at $83.30 as of January 28th. CTSH’s trailing and forward P/E were 19.59 and 15.04 respectively according to Yahoo Finance.

Cognizant Technology Solutions (CTSH) is a mid-cap, dividend-paying IT services firm operating globally across North America, Europe, and other regions, serving clients in financial services, healthcare, products and resources, and communications, media, and technology.

Founded in 1988, the company leverages consulting, technology, and outsourcing services to help clients transition to AI- and data-driven operations, positioning itself as a timely and enduring partner in the digital era. Its intangible assets and high customer switching costs underpin a narrow economic moat, reflecting a degree of defensibility in a competitive industry.

While Cognizant’s trailing five-year revenue growth has been positive but below broader market averages, the company maintains double-digit net profit margins, demonstrating operational efficiency despite modest top-line expansion. Senior management has delivered satisfactory returns on equity and invested capital, exceeding the firm’s cost of capital, and underscoring disciplined capital allocation.

A recently expanded $3.1 billion share repurchase program, with $1.1 billion planned for 2025, highlights management’s confidence in the company’s strategy and future prospects. Owner earnings, measured as EPS growth plus dividends, have been strong, with a five-year trailing annualized growth in the mid-teens and one-year EPS growth of 12.2%, reflecting meaningful shareholder value creation.

CTSH’s combination of a durable business model, consistent profitability, and shareholder-focused capital deployment forms the basis of its bullish rating by QVI. While growth has lagged the broader market, the company’s strategic positioning in AI- and data-driven digital transformations, coupled with strong operational returns and an active share buyback program, presents a compelling risk/reward profile for investors seeking both income and growth in the IT services sector. Overall, Cognizant offers a resilient investment with steady earnings, robust margins, and catalysts for potential market revaluation.

Previously, we covered a bullish thesis on Cognizant Technology Solutions Corporation (CTSH) by Magnus Ofstad in May 2025, highlighting its AI-led productivity strategy, strong Q1 revenue growth, and partnerships with NVIDIA, Microsoft, and Google. CTSH’s stock price has appreciated by approximately 7.20% since our coverage. David J. Waldron shares a similar bullish view but emphasizes its durable business model, consistent profitability, and share repurchase program.

Cognizant Technology Solutions Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held CTSH at the end of the third quarter which was 47 in the previous quarter. While we acknowledge the risk and potential of CTSH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CTSH and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.