Accenture Earnings: Healthy AI Bookings Highlight Firm’s Relevance

Key Morningstar Metrics for Accenture

• Fair Value Estimate

  : $255.00

• Morningstar Rating

  : ★★★★

• Morningstar Economic Moat Rating

  : Narrow

• Morningstar Uncertainty Rating

  : Medium

What We Thought of Accenture’s Earnings

Accenture’s ACN 4% constant-currency revenue growth and operating margin of 14% for the fiscal second quarter were in line with our expectations. Total quarterly bookings of over $22 billion and 41 diamond client additions both set new records for the company.

Why it matters: Accenture is deepening its partnership with leading enterprise system vendors, underpinning its organizational DNA of constant reinvention to meet clients’ shifting needs. Its expansion of entry-level headcount positions it well for artificial-intelligence-led enterprise IT demand.

• Over 60% of Accenture’s quarterly revenue is driven by its top 10 ecosystem partners, including Microsoft, SAP, and Workday. We believe Accenture can benefit from its dominant position in system integration when enterprises are ready to deploy agentic AI solutions at scale.
• Total AI and data bookings are on track to more than double in fiscal 2026. Customers are coming to Accenture for its strong AI credentials and comprehensive AI portfolio, which has led to strong growth momentum in AI.

The bottom line: We maintain our $255 per share fair value estimate for narrow-moat Accenture. Despite the 4% post-earnings rally, the shares appear undervalued following the earlier selloff on AI disruption fears. In our view, the market is overly concerned about Accenture losing its relevance in the AI era.

• Accenture’s strong AI booking trend supports our thesis that clients’ IT modernization demand for AI readiness can bring tailwinds to IT consulting firms. However, we reiterate the uncertainty around the timeline of organization-level AI rollouts.
• Continued AI booking growth and on-time conversion from bookings to revenue should help close the 20% gap between the stock’s current market price and our fair value estimate.

Coming up: Management increased its full-year free cash flow guidance by $1.0 billion to $10.8 billion-$11.5 billion, thanks to robust working capital management that reduced days sales outstanding.