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In a world where artificial intelligence (AI) is upending industries and disrupting the way we work every day, companies that are at the forefront of this revolution are rewarded by investors. One company that enterprises are scrambling to partner with is data analytics specialist Palantir (PLTR).
Palantir already plays a vital role in the federal government’s defense strategy through its AI-enabled platforms, and it is simultaneously growing its consumer business.
So, when IT major Accenture (ACN) revealed that it would partner with Palantir to deploy commercial-grade, AI-powered solutions for U.S. federal government customers, the buzz around the stock was palpable. Although ACN stock is down about 14% on a YTD basis, shares have popped 2.6% over the past five days.
About Accenture
Accenture is a leader in professional services, offering a wide range of capabilities like consulting, technology, cloud and artificial intelligence, among others. It helps its government and commercial clients become more efficient, competitive, and future-ready.
Valued at a market cap of $189.5 billion, ACN stock offers a dividend yield of 1.96%, which is higher than the technology sector average of 1.37%. With a payout ratio of 42.9%, there remains some room for growth.
However, is an alliance with one of the most consequential companies of this era enough to justify an investment in ACN stock?
Accenture Has Sound Fundamentals
Though nothing sensational, Accenture has grown its revenue and earnings at steady compound annual growth rates (CAGRs) of 8% and 10% over the past 10 years, respectively, while shares have gained 193% in the same timeframe.
In the most recent quarter, Accenture’s revenue and earnings both surpassed consensus estimates. Revenues increased by 8% from the previous year to $17.7 billion, amid strong growth in each of its industry groups. Its earnings went up by 15% in the same period to $3.49 per share.
Cash flow from operations came in at a healthy $3.68 billion in its fiscal third quarter ompared to $3.14 billion in the year-ago period as free cash flow grew to $3.52 billion from $3.02 billion. Operating margins also saw an improvement of 80 basis points to 16.8%.
Overall, Accenture closed the quarter with a cash balance of $9.6 billion, which was much higher than its short-term as well as long-term debt levels of $115.1 million and $5.04 billion, respectively.
However, a 6% year-over-year decrease in new bookings to $19.7 billion remains an area of concern as it indicates that corporations may be curbing their professional services spending. A rise in new bookings for generative AI to $1.5 billion compared to $900 million in the previous year was a positive development, though.
For Q4 FY 2025, Accenture expects revenues to be in the range of $17 billion to $17.6 billion, the midpoint of which is similar to the consensus revenue estimate of $17.33 billion.
AI Powers Growth, Diversification Provides Stability
Accenture is doubling down on its AI initiatives to drive growth. To that end, management has recently revealed that it has trained half a million employees with the skills required to deliver AI-focused consulting services. Accenture’s pursuit of this objective began back in 2023, when it set in motion a $3 billion investment roadmap dedicated to artificial intelligence. As part of this initiative, the company committed to building an AI-enabled workforce by providing targeted training, ultimately aiming to create a pool of 80,000 AI-proficient professionals.
Accenture has also established a strategic alliance with Nvidia (NVDA) to co-develop intelligent systems capable of recreating warehouse environments in digital form. These virtual replicas are designed to open up new possibilities in warehouse automation, AI learning, and robotics integration. As of now, the company is developing 50 proprietary AI agents using Nvidia’s reasoning architecture, and it has expressed intentions to scale this portfolio to 100 agents by the close of 2025. These intelligent agents are expected to deliver industry-wide impact across verticals such as finance, telecom, and more. Additionally, through its partnership with OpenAI, Accenture has embedded advanced large language models into its internal tools, enhancing functionality in areas such as forecasting, decision support, and knowledge retrieval.
Complementing this internal AI push is Accenture’s aggressive acquisition strategy. In 2024 alone, the firm completed 46 acquisitions, spending approximately $6.6 billion to integrate capabilities in cloud services, artificial intelligence, design agencies, and engineering talent. These acquisitions are typically scaled across its client base, resulting in meaningful leverage of new capabilities. Notably, over 70% of the company’s total revenue now originates from emerging technology verticals, including AI, cybersecurity, analytics, and cloud infrastructure.
Finally, what sets Accenture apart is its hybrid service architecture, which combines traditional consulting and strategy with next-generation technology and creative capabilities. This diversified structure offers comprehensive exposure to broad-based technological trends, from digital transformation to cloud deployment, while reducing exposure to volatility in any single area. Accenture serves a wide-ranging client base, cutting across sectors as diverse as healthcare, communications, financial services, and government. This breadth, coupled with consistently strong margins, modest leverage, a consistent dividend policy, and healthy free cash flows, positions the firm as a resilient long-term holding for investors.
Analyst Opinions on ACN Stock
Overall, analysts have given ACN stock a consensus rating of “Strong Buy” with a mean target price of $349.24. This indicates upside potential of about 15.6% from current levels. Out of 22 analysts covering the stock, 15 have a “Strong Buy” rating, one has a “Moderate Buy” rating, and six have a “Hold” rating.
