Accenture's stock price plummeted 18% to a near decade low, pressured by both AI disruption and Middle East turmoil.

```

Accenture, one of the world's largest IT consulting companies, saw its share price plunge 18% on Thursday after lowering its full-year revenue outlook, hitting its lowest level since 2017. Its market value has shrunk from over $200 billion after the pandemic to less than $80 billion.

The company lowered the upper range of its full-year revenue growth forecast to 4%, below the previous range of 3% to 5%. New quarterly contracts dropped to $19.3 billion, a 3% year-on-year decrease. CEO Julie Sweet said on an analyst call that cumulative sales losses in the Middle East have reached $400 million, due to regional turmoil, and the Iran conflict has slowed decision-making by enterprise customers outside the region, causing broader ripple effects.

Meanwhile, investors’ concerns about whether AI tools can gradually replace Accenture’s core services continue to rise. The market doubts whether the company can deliver on its AI transformation promises as technologies can handle more “heavy lifting,” and whether enterprise customers will maintain expected IT spending levels.

Accenture has fallen 51% so far this year, with peers also under pressure—IBM dropped 6% the same day and is down 15% year-to-date; competitor Infosys is down about 40% year-to-date. This earnings shock has further heightened doubts about the outlook for the entire professional services industry.

Middle East conflict drags quarterly revenue

Julie Sweet stated that the Iran conflict has caused cumulative losses of $400 million in Accenture's Middle East sales, with an additional unexpected $100 million impact this past quarter. The uncertainty caused by the conflict not only directly hurts local business but also prompts enterprise customers outside the region to tighten discretionary spending.

Changes in project timelines further compressed revenue that could be recognized this period. The company said some customers delayed projects originally scheduled for this fiscal year to the next—Accenture’s new fiscal year starts September 1. This delay, combined with direct local losses, brought a double drag to this quarter’s financial results.

AI disruption shakes confidence in business model

The rapid evolution of AI tools is prompting investors to increasingly question whether Accenture can continue to deliver value for customers. Pat Petitti, CEO of AI consulting platform Catalant, noted, consultants at large firms like Accenture generally lack the deep industry operational experience needed to properly use AI in specific business contexts and verify its output. “Real deployment of AI requires deep expertise in the actual application domain, which is what they lack—and investors are starting to notice,” he said.

Jefferies analyst Surinder Thind called this performance “disappointing” and wrote in a client report that “questions about demand resilience may intensify in an AI-first world, especially given recent advances in AI models and agents.” Julie Sweet admitted that total enterprise IT budgets aren’t expanding due to AI. “Even with AI, their spending habits are changing, but the total isn’t increasing,” she told analysts.

Aggressive M&A seeks new growth

Facing growth pressure in its traditional core business, Accenture greatly increased its acquisition budget. This fiscal year, acquisition spending will reach $9 billion, more than double the original plan. The company announced three cyber-security deals: it will acquire vulnerability assessment company runZero and device security expert NetRise outright and take a majority stake in Dragos, an industrial control systems cybersecurity company. Combined, the three deals are worth about $4.2 billion. In January, the company also acquired UK AI startup Faculty for $1 billion.

However, according to Bloomberg, Morgan Stanley earlier this week downgraded Accenture’s rating and cut its target price, citing investor doubts about whether the company's “product-oriented” acquisition strategy will convert to revenue growth. Still, the report noted that Accenture has the conditions for eventual recovery, though the timing remains unclear.

Large orders show partial resilience

Despite overall pressure, Accenture is still finding support in large-scale projects. So far this fiscal year, there have been 104 quarterly customer orders worth $100 million or more, a 13% year-on-year increase. Julie Sweet stressed on the analyst call that demand for large projects remains strong.

These figures suggest that while discretionary spending on small and medium projects is squeezed, enterprise willingness to invest in large strategic IT projects hasn’t clearly declined, leaving some space for Accenture’s long-term recovery prospects.

Risk Warning and DisclaimerThe market has risks, and investments should be made cautiously. This article does not constitute individual investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of particular users. Users should consider whether any opinions, points of view, or conclusions in this article suit their own situation. Investing based on this is at your own risk. ```