- Price
- $66.03
- Fair value
- $84.00
- Discount
- 21.4%
- Uncertainty
- Medium
- LSEG rating
- 2.43
- Moat
- Narrow
- Next earnings
- 2026-10-29
- Next earnings is estimate
- No
- Company name
- Cognizant
- Sector
- IT services
- About
- Cognizant provides IT and business services to large companies. It builds and runs software, data and AI systems, modernizes infrastructure and runs business processes. Financial Services is its largest and most mature segment. Revenue was $5.48 billion in Q2 2026, and headcount was 356,700 at June 30, 2026. In 2026, it bought 3Cloud, a Microsoft Azure services provider, and Astreya, an IT managed services provider. Ravi Kumar S is CEO.
- Thesis
- The market fears that AI tools will reduce demand for the labor-based IT services that Cognizant sells. Revenue growth slowed to 4.1% in constant currency in Q2 2026 from 7.2% a year earlier, and Q2 bookings fell 6%. Cognizant also took an $84 million restructuring charge in Q2 2026. Management says that AI creates more work in data, infrastructure and engineering, and the company bought back $1.6 billion of shares in the first half of 2026. For the gap to close, three things must be true. Revenue must grow within the 2026 guidance of 4.0% to 5.5% in constant currency. The adjusted operating margin must reach 16.0% to 16.2% in 2026 and keep rising. Bookings must grow again, so that the trailing 12-month book-to-bill stays above 1.0. The Q3 2026 report on October 29, 2026 and the 2027 outlook in early 2027 are the next tests. If these checks pass, the gap can close over the next two years. The main reason it may not close is that AI lowers prices for IT services faster than new AI work grows.
- Risks
- AI tools can do more of the coding, testing and support work that Cognizant sells by the hour. Clients can ask for lower prices or fewer people, and revenue can grow slower than costs fall.
Q2 2026 bookings fell 6%. If large deals slow further, revenue growth falls in 2027.
Voluntary attrition rose to 13.0% in the 12 months to June 30, 2026. Higher attrition raises hiring and training costs and can lower delivery quality.
Debt rose to $1.56 billion at June 30, 2026, after buybacks and acquisitions. Debt is still small compared with earnings.
- Balance sheet
- Cash: $1.1B
Debt: $1.6B
Net debt: $510M
Interest cover: 86×
Undrawn credit line: $850M, to October 2031
Debt due within 12 months: $33M
Last debt due: 2031
Cognizant has low debt. At June 30, 2026, debt was $1.56 billion: $1.0 billion drawn on the revolving credit facility and a term loan of $561 million. Cash and short-term investments were $1.05 billion, down from $1.91 billion at December 31, 2025, after share repurchases of $1.6 billion and acquisitions of $1.3 billion in the first half of 2026. On October 5, 2026, Cognizant replaced its credit facilities with a $550 million term loan and a $1.85 billion revolving credit facility, both due on October 3, 2031, and borrowed about $1.0 billion under the new revolver to repay the old one. Interest cover is income from operations divided by interest expense for the first half of 2026.
As of 2026-06-30.
- Checkpoints
- Oct 29, 2026: Q3 2026 earnings: growth and bookings. Pending. Watch: Revenue within the Q3 guidance of $5.60 billion to $5.68 billion and growing bookings pass; revenue below guidance or another fall in bookings fail.
Q1 2027 (estimate): 2027 outlook. Pending. Watch: 2027 guidance for revenue growth near 2026 levels and further margin expansion pass; guidance for slower growth or a lower margin fail.
- Recent events
- 2026-10-05: Cognizant signed new credit facilities: a $550 million term loan and a $1.85 billion revolving credit facility, both due on October 3, 2031. It used them to repay its old term loan and about $1.0 billion of revolving loans.
2026-07-29: Cognizant reported Q2 2026 results. Revenue rose 4.5% to $5.48 billion, or 4.1% in constant currency. Adjusted EPS rose 4.6% to $1.37. Trailing 12-month bookings rose 5% to $29.1 billion, but Q2 bookings fell 6%. It raised 2026 adjusted EPS guidance to $5.70 to $5.82 and narrowed revenue growth guidance to 4.0% to 5.5% in constant currency.
2026-06-22: Cognizant completed its purchase of Astreya, an AI-first IT managed services provider, for $634 million net of cash, including contingent consideration of $25 million.
2026-05-18: Cognizant raised its 2026 share repurchase target by $1 billion to $2 billion, and the board added $2 billion to the repurchase authorization. The company borrowed $1 billion under its revolving credit facility for the buyback and the Astreya purchase.