Nearly three years after hitting the $400 per share price mark, Accenture stock continues to trade sideways. Even though the company has grown at a healthy CAGR of 16.2% since 1989, its revenues have stagnated in the last two years. We believe AI presents the company with the perfect opportunity to rekindle that growth and drive a bull rally.
Accenture is an Ireland-based company that offers consulting, strategy, technology, and operations services to global clients. It employs about 775,000 employees that serve clients in more than 120 countries.
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The company has categorized its products and services into four main components. The strategy and consulting services involve envisioning and executing organizational changes. The technology services deliver cloud computing, cybersecurity, and systems integration solutions to businesses.
The company’s Industry X services department helps organizations with the digital transformation of manufacturing and production processes while the operations services focus on efficiency improvement in the business operations of organizations.
These services are offered to clients in various industries including automotive, banking, capital markets, healthcare, retail, and telecommunications. The company’s over 9000 clients include names like Nvidia, Microsoft, Unilever, Adidas, and Barclays among others.
Accenture has continued to rally after announcing its results for the fiscal year ending August 2024. A 2.6% revenue growth came in above expectations. But that’s not what’s causing all the excitement. The company’s generative AI initiatives have started to show results. The generative AI tools that Accenture has offered its clients have resulted in a 21% growth in new bookings compared to the same period last year.
These AI tools aren’t just helping the company’s clients. They have resulted in an increase in the company’s margins as well, directly impacting its profitability. There aren’t many companies around at the moment that have a realistic figure to show for the ROI on their AI investments. Accenture does, and that’s what is driving the optimism. Once the company consolidates this performance, analysts will start giving it the appropriate valuation, driving it to new all-time highs.
Accenture is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held ACN at the end of the second quarter which was 57 in the previous quarter. While we acknowledge the potential of ACN as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as ACN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.