Accenture stock plunged 16% in premarket trading on June 18 after the consulting giant cut its full-year revenue growth guidance to 3%-4% in local currency, down from a prior outlook of 3%-5%, signaling mounting headwinds in client spending.
The company reported fiscal third-quarter earnings of $3.80 per share, beating the consensus estimate of $3.72, but revenue came in at $18.7 billion, falling short of the expected $18.78 billion. New bookings totaled $19.3 billion, down from $19.7 billion in the same quarter last year.
CEO Julie Sweet attributed the guidance reduction to weakness in Accenture’s U.S. federal business, which is expected to drag 1% from full-year revenue growth. Sweet also cited Middle East impact as a factor in the revised outlook. For the year, the company now expects adjusted earnings per share of $13.78 to $13.90, up from prior guidance of $13.65 to $13.90.
The guidance cut reflects a deeper problem than AI disruption fears: clients are pulling back on discretionary spending. Jefferies analyst Surinder Thind noted that “clients appeared to pull back further on discretionary spend” in the latest quarter. Morgan Stanley downgraded Accenture to Equal-Weight from Overweight on June 17, citing the fact that “we are not seeing the budget growth inflection we had previously expected.”
Accenture’s consulting segment, which accounts for roughly half of total revenue, faces pressure as customers’ IT spending budgets constrict. The current interest-rate environment compounds the challenge—flat rates offer no boost to client budgets, while any potential hikes would tighten spending further. Morgan Stanley noted that massive investments in AI are draining resources away from information technology services, the company’s core business.
Acquisitions Amid Weakness
On June 18, Accenture announced a roughly $4.175 billion acquisition spree in cybersecurity, taking a majority stake in Dragos and buying both runZero and NetRise outright. The deals are designed to bolster the company’s ability to protect power grids, factories, and data centers from attackers. Morgan Stanley analysts had noted just days before the report that investors were growing skeptical of Accenture’s increasingly product-focused acquisitions, which “carry less visible revenue contribution than its historical legacy services deals.”
The company continues to expect free cash flow in the range of $10.8 billion to $11.5 billion. Morgan Stanley believes Accenture remains “well positioned for an eventual recovery, given its scale, enterprise relationships, and exposure to large transformational programs,” though “the timing of any reacceleration remains increasingly uncertain.”
Sources
- Yahoo Finance — Q3 fiscal 2026 earnings details, revenue guidance cut to 3%-4%, EPS beat, bookings decline, and free cash flow guidance
- Barron’s — Analyst commentary from Jefferies and Morgan Stanley on discretionary spending pullback, AI investment impact on IT services, and acquisition skepticism
- CNBC — CEO Julie Sweet’s statement on Middle East impact in guidance reduction
- Investing.com — Federal business impact of 1% on revenue and acquisition details
- KuCoin — Full-year guidance revision from 3%-5% to 3%-4%
