Is Cognizant (CTSH) Using AI Deals and Buybacks to Quietly Redefine Its Core Strategy?

• Cognizant Technology Solutions recently reported fourth-quarter 2025 revenue of US$5.33 billion and net income of US$648 million, raised its quarterly dividend to US$0.33 per share, confirmed 2026 guidance calling for mid-single-digit revenue growth, and detailed continued share repurchases under its long-running buyback program.
• Management also highlighted momentum in large AI-led deals, including new partnerships with firms such as Adobe, Uniphore, Cognition, Typeface and renewed multi-year client agreements, underscoring how AI-focused services and long-term contracts are becoming a larger part of Cognizant’s business mix.
• We’ll now look at how Cognizant’s AI-led growth focus and capital return plans shape the company’s broader investment narrative for investors.

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What Is Cognizant Technology Solutions' Investment Narrative?

For Cognizant to make sense in a portfolio, you really need to believe in a steady, services-led compounder that can weave AI into its core outsourcing and consulting engine while quietly returning a lot of cash to shareholders. The latest quarter largely supports that view: revenue and earnings were up year over year, 2026 guidance points to mid-single-digit revenue growth, and the company is pairing an increased US$0.33 dividend with ongoing buybacks after retiring over 30% of its shares since 2017. Near term, the main catalyst is whether Cognizant can convert its record large-deal bookings and new AI partnerships with Adobe, Uniphore, Cognition and Typeface into sustained, higher-quality revenue, especially in financial services and other regulated sectors. The biggest risk is that AI-led projects and modernization work take longer or prove less profitable than expected, leaving growth and margins stuck at the lower end of management’s ambitions despite all the new activity.

Despite the positives, one risk in particular could matter more than many investors expect. Despite retreating, Cognizant Technology Solutions' shares might still be trading 41% above their fair value. Discover the potential downside here.

Exploring Other Perspectives

Eight Simply Wall St Community fair value estimates for Cognizant span roughly US$66 to about US$131 per share, underlining how far apart individual views can be. As you weigh those against Cognizant’s AI-heavy deal pipeline and capital returns story, it is worth asking how much faith you place in those AI-led projects actually lifting growth rather than just keeping the business treading water.

Explore 8 other fair value estimates on Cognizant Technology Solutions - why the stock might be worth as much as 71% more than the current price!

Build Your Own Cognizant Technology Solutions Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Cognizant Technology Solutions research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Cognizant Technology Solutions research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Cognizant Technology Solutions' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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