Cognizant's AI Gamble: What Nearshore Must Learn

Cognizant (CTSH) reported Q2 2026 results with revenue of $5,481 million year over year and net income of $636 million. The company raised elements of its 2026 revenue outlook and declared a $0.33 per share quarterly dividend payable Aug. 25, 2026. It also expanded enterprise AI efforts, including multi-year client wins and an EMEA AI unit.

Cognizant (CTSH) trades at a discount versus its historical valuation, with forward GAAP P/E of 8.31x and P/S of 0.97x. In Q2, it reported EPS $1.37 vs $1.38 expected, 4.5% revenue growth, and $459M free cash flow. Management guided Q3 growth 3.8%-5.3% YoY and FY EPS to $5.76 midpoint. Guggenheim cut its price target to $65 but kept a Buy; analysts’ mean target is $60.12.

Cognizant reported Q2 net profit of $636 million, down 1.4% year over year, while revenue rose 4.5% to $5.5 billion (4.1% in constant currency). The company cut its full-year constant-currency growth guidance to 4-5.5% from 4-6.5%. Margins improved to 15.9% and headcount fell to 356,700.

Cognizant Technology Solutions reported 4.1% year-over-year constant-currency revenue growth in Q2 2026, driven by North America and 12% growth in financial services. The company revised full-year revenue guidance to 4% to 5.5% growth and kept adjusted operating margin at 16% to 16.2%. It cited an $81M one-time India benefit, Project LEAP costs, and interest expense after a $1B Astreya-related draw.

Morningstar’s stock note says Cognizant (CTSH) reported 4% Q2 constant-currency revenue growth, with operating margin steady at 16% and trailing 12-month bookings up 5%. It attributes results to North America and financial services, where growth was 12%. Morningstar keeps a $84 fair value estimate and 16.0%-16.2% operating margin guidance, while trimming full-year revenue growth outlook to 4.0%-5.5%.

Cognizant Technology forecast third-quarter revenue of $5.60 billion to $5.68 billion, below Wall Street’s $5.70 billion average, citing cautious client spending on discretionary IT. It also cut its annual revenue outlook to $22.04 billion to $22.35 billion. Second-quarter revenue was $5.48 billion, up 4.5% year over year, Reuters/LSEG data show.