COGNIZANT TECHNOLOGY SOLUTIONS CORP (CTSH)

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AI: Undervalued

Price checkModest growth costs only about ten times expected profit, making the shares look undervalued.

At the August 14 close of $58.79, Cognizant’s equity was worth about $26.6 billion using 452 million June shares. Management’s 2026 adjusted profit forecast of $5.70–$5.82 per share implies 10.2 times the midpoint; that forecast excludes restructuring and certain currency effects. The 2025 free cash flow—cash left after operations and capital spending—was $2.60 billion, also about 10.2 times the equity value. This price requires stable earnings and modest growth, not rapid expansion, supporting an undervalued verdict.

Big pictureRevenue and profit are durable, but customers can still delay optional technology work.

Revenue rose from $16.65 billion in 2020 to $21.11 billion in 2025, while annual net income stayed near $2.1–$2.3 billion from 2021 onward. Free cash flow remained positive throughout, ranging from $1.83 billion to $2.60 billion during 2021–2025. Second-quarter 2026 revenue grew 4.5% and the operating profit margin improved to 15.9% from 15.6%. However, quarterly contract bookings fell 6%, showing cyclicality as clients delayed optional projects. Financial Services grew 12%, while the other three segments grew only 1.2%–1.5%.

Business strengthCognizant retired many shares, though acquisitions consumed much of its cash cushion.

Outstanding shares fell from 530 million in 2020 to 452 million in June 2026, so repurchases more than offset employee share awards, which cost $181 million in 2025. Cognizant spent $1.15 billion repurchasing shares and $157 million on dividends during the second quarter. Current assets of $7.56 billion comfortably exceeded current liabilities of $3.46 billion. However, $1.05 billion of cash and short-term investments was below $1.56 billion of debt, leaving about $0.51 billion of net debt after $1.33 billion of first-half acquisition spending.

What could change the storyStronger contract wins would confirm the bargain; weaker orders could expose structural decline.

The bull case is supported by 12% Financial Services growth and $29.1 billion of trailing bookings—signed contract value not yet recorded as revenue—equal to about 1.3 times annual sales. It strengthens if bookings resume growth, annual free cash flow returns above roughly $2.3 billion, and the operating profit margin remains near 16%. The bear case strengthens if the second quarter’s 6% bookings decline persists, Health Sciences stalls near its recent 1.4% growth, or artificial intelligence reduces billable work faster than Cognizant creates new services. Stable earnings are essential to the low valuation.

$58.79 price considered

AI: News

Profit outlook raisedSecond-quarter sales grew, profit guidance rose, and shares jumped despite cautious spending signals.

On July 29, Cognizant reported second-quarter revenue of $5.48 billion, up 4.5%, and adjusted profit of $1.37 per share, up 4.6%. It raised full-year adjusted profit guidance to $5.70–$5.82 per share, but narrowed revenue growth expectations excluding currency movements to 4.0%–5.5%. Third-quarter revenue guidance also fell slightly below analysts’ average estimate. Shares closed 11.25% higher that day; Reuters reported a roughly 10% gain during trading, plausibly reflecting the stronger annual profit outlook.

Artificial intelligence fears returnedA peer’s weak outlook and an analyst downgrade revived fears that automation could erode service demand.

On June 18, Cognizant shares closed 10.5% lower, at $43.70. Investing.com reported that Accenture’s reduced outlook prompted a broad technology-services selloff, while Berenberg downgraded Cognizant from Buy to Hold and cut its target from $81 to $59. The analyst cited a faster artificial-intelligence transition and a weaker outlook for traditional services. These developments plausibly contributed to the decline, although timing alone cannot establish sole causation. The concern is that automation could reduce billable hours and pressure prices.

Share purchases acceleratedCognizant doubled planned share purchases, increasing each remaining share’s claim on future profit.

On May 18, Cognizant increased its 2026 share-repurchase target from $1 billion to $2 billion, while the board added $2 billion to the broader authorization. During the second quarter it subsequently spent $1.15 billion buying 22.5 million shares, helping reduce outstanding shares from 479 million at December 2025 to 452 million in June. This supports profit per share, but the company simultaneously spent $1.33 billion on first-half acquisitions and borrowed $1 billion, reducing the balance-sheet cushion. No distinct one-day market reaction was reliably isolated.

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Free cash flow

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Total cash / debt

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007
Revenue	$21.11B	$19.74B	$19.35B	$19.43B	$18.51B	$16.65B	$16.78B	$16.13B	$14.81B	$13.49B	$12.42B	$10.26B	$8.84B	$7.35B	$6.12B	$4.59B	$3.28B	$2.82B	$2.14B
Operating income	$3.39B	$2.89B	$2.69B	$2.97B	$2.83B	$2.11B	$2.45B	$2.80B	$2.48B	$2.29B	$2.14B	$1.89B	$1.68B	$1.36B	$1.14B	$861.9M	$618.5M	$516.7M	$381.5M
EBITDAderived	$3.94B	$3.43B	$3.24B	$3.54B	$3.40B	$2.67B	$2.98B	$3.30B	$2.92B	$2.67B	$2.47B	$2.09B	$1.86B	$1.52B	$1.26B	$972.0M	$707.9M	$591.5M	$435.4M
Net income	$2.23B	$2.24B	$2.13B	$2.29B	$2.14B	$1.39B	$1.84B	$2.10B	$1.50B	$1.55B	$1.62B	$1.44B	$1.23B	$1.05B	$883.6M	$733.5M	$535.0M	$430.8M	$350.1M
Basic EPSper diluted share	$4.57	$4.52	$4.21	$4.42	$4.06	$2.58	$3.30	$3.61	$2.54	$2.56	$2.67	$2.37	$2.03	$1.74	$2.91	$2.44	$1.82	$1.49	$1.22
Diluted EPSper diluted share	$4.56	$4.51	$4.21	$4.41	$4.05	$2.57	$3.29	$3.60	$2.53	$2.55	$2.65	$2.35	$2.02	$1.72	$2.85	$2.37	$1.78	$1.44	$1.15

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys1$209.8K disclosed value

Sells (SEC code S)41$9.88M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Jun 15, 2026Form 4 · 10b5-1	Kerdman AlinaSVP, Controller & CAO	SellClass A Common Stock	133	$51.70	$6.9K	990
Jun 10, 2026Form 4	ROHLEDER STEPHEN JDirector	BuyClass A Common Stock	4.0K	$52.00	$209.8K	4.0K
Jun 1, 2026Form 4 · 10b5-1	Kerdman AlinaSVP, Controller & CAO	SellClass A Common Stock	146	$56.41	$8.2K	989
May 18, 2026Form 4 · 10b5-1	Kerdman AlinaSVP, Controller & CAO	SellClass A Common Stock	154	$48.04	$7.4K	723
Apr 2, 2026Form 4 · 10b5-1	Kerdman AlinaSVP, Controller & CAO	SellClass A Common Stock	194	$61.29	$11.9K	877

Review ownership filings at SEC.gov ↗

COGNIZANT TECHNOLOGY SOLUTIONS CORP (CTSH)

Financial charts

Financial statements

Insider buys & sells