We recently wrote a deep dive into the boom in AI Consulting. These companies help businesses harness machine learning, automation, and data analytics.
As AI products and services become increasingly powerful, the demand for AI consultants to help implement them will only grow.
It's a brand-new mega trend.
The only problem is that the industry is entirely dominated by International Business Machines $IBM. Traditional consulting firms like Accenture $ACN are getting their butts kicked.
Accenture reported a double beat on Thursday and got crushed for it. The stock closed 7.26% lower and was down over 10% intra-day.
The reaction was nasty.
The company's operating margin is compressing due to increased competition. Moreover, the market is concerned the new administration in Washington will quit doing business with ACN. This would be a significant loss in revenue.
They also issued weak guidance for 2025, which only made things worse.
Accenture has enjoyed an industry with limited competition for decades, but AI has changed that forever. Their business is in danger if they don't pivot more aggressively into providing state-of-the-art AI consulting services.
Now, let's talk about what else happened on Thursday.
Here are the latest earnings stats from the S&P 500 ๐
*click the image to enlarge it
As you can see, Accenture was the largest stock to report earnings. They reported revenues of $16.7B versus the $16.62B estimate and $2.82 per share versus the $2.81 estimate.
Jabil $JBL was the smallest stock to report earnings. They reported revenues of $6.73B versus the $6.41B estimate and $1.94 per share versus the $1.83 estimate.
Darden Restaurants $DRI and Factset Research Systems $FDS reported mixed results.
Now, let's dig into the data and look at some of the best and worst earnings reactions ๐
DRI has been rewarded for 4 consecutive earnings reports:
Darden Restaurants reported mixed results, but the market rewarded it. The price rallied 5.8% with a reaction score of 3.8.
The company reported sales and profit margin growth for all segments of its business. The most notable increase came from Olive Garden and LongHorn Steakhouse.
The management team also issued better-than-expected guidance for 2025.
It was a fantastic report.
The stock is flirting with new all-time highs as it's resolving a textbook accumulation pattern.
If DRI is above 180, the path of least resistance is higher for the foreseeable future.
JBL has been rewarded for 3 consecutive earnings reports:
Jabil reported a double beat and was rewarded for it. The price rallied 3.1% with a reaction score of 1.74.
The company's intelligent infrastructure segment grew remarkably by 18% year-over-year. This was driven by strong demand for AI-related cloud and data center infrastructure.
In addition to the tremendous quarterly results, the management team also raised its guidance for 2025.
The market loved it.
The stock looked vulnerable to further downside heading into the report, but the bulls stepped up and repaired the damage. All of the bears are now trapped below a key level of interest.
If JBL is above 140, the path of least resistance is higher for the foreseeable future.
ACN has been punished for 6 of its last 8 earnings reports:
Accenture reported a double beat, but the market hated it. The price fell 7.3% with a reaction score of -4.94.
The stock is decisively gapped below the VWAP anchored to the prior cycle's peak. This has been a key level of interest for years.
If ACN is below 316, the path of least resistance is sideways to lower for the foreseeable future.
