Key Points

A pair of modest beats on first-quarter results was enough to bring a pack of bulls into the stock. The company is harnessing artificial intelligence (AI) to enhance its offerings.

IT services and consulting company Cognizant Technology Solutions(NASDAQ: CTSH) enjoyed a buoyant Thursday on the stock market. The company's shares ended the trading session in positive territory, with a more than 2% rise on the back of a well-received quarterly earnings report. That performance was sufficient to top the S&P 500(SNPINDEX: ^GSPC), which crept up by 0.6%.

Growth where it counts

For its first quarter, Cognizant's revenue totaled almost $5.12 billion, representing a 7.5% gain over the same period of 2024. That was on the back of a 3% improvement in trailing-12-month bookings, to $26.7 billion. Generally accepted accounting principles (GAAP) net income also rose, landing at $663 million from the year-ago $546 million profit. On a non-GAAP (adjusted) and per-share basis, the company's earnings were 10% higher at $1.23.

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The two core fundamentals were slightly higher than analysts had anticipated. Those pundits were collectively modeling $5.06 billion on the top line, and $1.20 per share for adjusted profitability.

In its earnings release, Cognizant said that artificial intelligence (AI) technology is making a difference for the company. It quoted CEO Ravi Kumar as saying, "Today, productivity, cost reduction, and resiliency are especially important, and we believe our differentiated AI and platform capabilities are helping clients navigate the near-term uncertainty while embarking on longer-term AI-led transformation."

In-line guidance

Cognizant also proffered guidance for both its current (second) quarter and full-year 2025. For the latter period, it's modeling $20.5 billion to $21 billion, which would mean growth of just under 4% at least. Adjusted earnings per share is forecast at $4.98 to $5.14.

The average analyst estimates fall within these ranges. The consensus for revenue is nearly $20.6 billion, and for adjusted net income is $4.99.

If I were a Cognizant shareholder, I would have liked to see a higher growth number for bookings; otherwise, it was a decent quarter for the specialized tech company. It's certainly worthy of consideration as a buy.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Cognizant Technology Solutions. The Motley Fool has a disclosure policy.

Why Cognizant Technology Solutions Stock Triumphed on Thursday was originally published by The Motley Fool

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