Accenture announced on Thursday acquisitions totaling $4.18 billion in the cybersecurity sector, seeking to further strengthen its presence in a rapidly growing industry.
However, a weak sales forecast caused its stock to drop 14%, highlighting the pressures that artificial intelligence is placing on the traditional consulting services model, according to Reuters.
The stock’s decline followed the company’s fourth-quarter revenue forecast, which came in below analysts’ estimates, as well as a reduction in its annual sales expectations.
Shares of its competitors, Infosys and Cognizant, fell 3.8% and 4.4%, respectively, before the opening of Wall Street, while Capgemini lost 6.8% in Paris.
Geopolitical and economic uncertainty has hurt demand for IT projects in recent months, while concerns that autonomous artificial intelligence tools could replace traditional software services have put pressure on valuations across the entire consulting services sector.
Cybersecurity Acquisitions
Accenture announced that it will acquire a majority stake in the industrial cybersecurity firm Dragos, while it will fully acquire the digital asset management company runZero and the device security specialist NetRise.
The deal is expected to strengthen Accenture’s cybersecurity business, which is already valued at approximately $10 billion.
Although cybersecurity spending continues to focus on traditional information systems, increasing connectivity and the wider use of artificial intelligence are making factories, power grids, and other critical infrastructure more vulnerable to cyberattacks.
The agreements, which are expected to close in August or September following the necessary approvals, will add companies with annual recurring revenue of $208 million to Accenture’s operations.
Forecasts Lowered
Accenture announced that it now expects annual revenue growth of between 3% and 4%, down from its previous forecast of 3% to 5%growth.
At the same time, it estimated that fourth-quarter revenue would range between $17.75 billion and $18.4 billion, lower than analysts’ median forecast of $18.47 billion, according to LSEG data.
In the third quarter, new contracts (bookings) totaled $19.3 billion, down approximately 2% year-over-year. Revenue rose 6% to $18.72 billion, falling just short of estimates of $18.75 billion.