Cognizant Earnings: Vendor Consolidation Trend Benefits Growth
In our view, the stock’s price does not yet fully reflect Cognizant’s favorable position in the AI era.

Key Morningstar Metrics for Cognizant Technology Solutions
- Fair Value Estimate: $84.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Medium
What We Thought of Cognizant Technology Solutions’ Earnings
Cognizant Technology Solutions CTSH finished 2025 strong, with fourth-quarter revenue up 5% and full-year revenue up 7%. Full-year operating margin expanded 140 basis points to 16%, its highest level since 2018. These positive results were mainly driven by increased fixed-price contracts and effective headcount scaling.
Why it matters: Cognizant benefits from vendor consolidation, as more enterprise clients expand their spending with IT suppliers boasting the most competitive artificial intelligence solutions. Clients’ conviction in Cognizant supported the trailing 12-month bookings growing to an all-time high of $28.4 billion.
- Financial services led growth, thanks to the adoption of AI-based use cases such as fraud detection and claim processing. The sector’s full-year revenue expansion of 7% reached a new high since 2016. We expect other industry groups to replicate this dynamic as new AI applications mature.
The bottom line: We maintain our $84 per share fair value estimate for narrow-moat Cognizant. Shares were up 3% following the earnings announcement but remain moderately undervalued. In our view, the stock’s current price does not yet fully reflect Cognizant’s favorable position in the AI era.
- We are glad to see Cognizant continue to make breakthroughs with large customers. Deals with $100 million or higher contract value were up 50% in 2025, which not only reinforces high switching costs but also underpins our 5% annual revenue growth forecast over the next five years.
- With fixed-price contracts now accounting for half of Cognizant’s total business, it is in a better position to share AI-led productivity gains with clients, which should support an average of 20 basis points of operating margin improvement between 2025 and 2030.
Coming up: Management’s 2026 guidance of 4.0%-6.5% constant-currency revenue growth and 15.9%-16.1% adjusted operating margin both match our expectations. An expanded AI product library should allow Cognizant to post another year of top-tier growth performance.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
