What Happened?
A number of stocks fell in the afternoon session after the renewed Middle East flare-up raised the prospect that corporate clients would once again throttle back discretionary technology and transformation spending.
IT consulting bookings are highly correlated with CFO confidence, and a fresh oil shock combined with sticky inflation and a Fed that might stay on hold into 2027 pushes large project decisions to the right on client roadmaps.
Furthermore, the sector was already navigating a structural adjustment as enterprise clients reassessed legacy services budgets in favor of generative AI-led delivery models. Layering geopolitical and macro uncertainty on top of that transition pressures both bookings growth and pricing on traditional managed services and systems integration deals, with Wall Street likely to mark down forward bookings and book-to-bill assumptions across the group.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- IT Services & Consulting company EPAM (NYSE: EPAM) fell 3.6%. Is now the time to buy EPAM? Access our full analysis report here, it’s free.
- IT Services & Consulting company DXC (NYSE: DXC) fell 4.5%. Is now the time to buy DXC? Access our full analysis report here, it’s free.
Zooming In On DXC (DXC)
DXC’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 3.4% on the news that major financial and service firms like BlackRock and Citigroup reported impressive earnings. Investor confidence was further bolstered by the S&P 500’s steady climb toward a new all-time high, supported by the prospect of a diplomatic resolution to the conflict in Iran.
These companies benefit from increased corporate spending and stabilizing macroeconomic conditions. As businesses shift their focus from crisis management to long-term growth, demand for professional services, digital transformation consulting, and automated financial platforms scales, allowing these providers to capitalize on higher deal volumes and expanded service contracts.
DXC is down 19.1% since the beginning of the year, and at $11.39 per share, it is trading 32.8% below its 52-week high of $16.94 from May 2025. Investors who bought $1,000 worth of DXC’s shares 5 years ago would now be looking at only $348.17.
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