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Accenture (NYSE:ACN) beat earnings estimates again on Thursday, raised full-year guidance, and posted record bookings. The stock still fell sharply. That disconnect is precisely what has two Wall Street firms cutting their price targets today, and it points to a deeper question about whether AI is actually driving new revenue growth at Accenture, or quietly shrinking the IT spending pie it depends on.
The Numbers Look Fine. The Stock Does Not.
Q2 FY26 EPS came in at $2.93 against a $2.84 estimate, and revenue of $18.04B beat estimates and grew 8.3% year over year. New bookings hit a record $22.11 billion, with 41 clients booking more than $100 million in the quarter. Management raised full-year guidance, lifting free cash flow guidance to $10.8B-$11.5B from $9.8B-$10.5B.
Yet the stock dropped to $186.31 in the hour after filing, and it is now down 23.69% year to date and 35.81% over the past year. The analyst consensus target sits at $268.51, nearly 30% above where the stock trades today, yet targets are moving lower, not higher.
The BMO Question That Cuts to the Core
The bearish angle circulating among analysts is not that Accenture is failing at AI. It is that AI may be structurally reducing the need for the large-scale IT consulting and managed services contracts that built Accenture’s revenue base. The concern, framed by BMO and echoed by at least one other firm cutting targets today, is whether AI functions as a longer-term tailwind through efficiency gains rather than a net new revenue driver. In other words: if AI helps clients do more with fewer consultants and fewer managed service hours, Accenture could be enabling its own margin compression over time.
CEO Julie Sweet pushed back directly on the call, stating “We’re accelerating our critical work with clients to scale advanced AI across their enterprise, and we’re seeing strong AI-driven growth.” The company cited $2.2 billion in advanced AI new bookings in Q1 FY26 and $5.9 billion in gen AI bookings for all of FY25 as evidence the pipeline is real.
What Investors Should Watch
The tension will not resolve until Accenture can demonstrate that AI bookings are additive to, not a replacement for, traditional consulting revenue. Two specific data points to track: whether the Health & Public Service segment, which declined 1% in local currency, stabilizes, and whether the elevated effective tax rate of 24.3% versus 20.4% a year ago creates further pressure on net income growth despite top-line strength. Q3 FY26 revenue is guided at $18.35B-$19.0B, and how that range is received will be the next real test of whether the AI story is compounding or stalling.
