CGI Inc Class A GIB

Turnaround for CGI's US Business Can Take Longer Than Expected

CGI is a global IT-services company with an outsize exposure to governments. Compared with private-sector customers, which make IT spending decisions based on the prevailing macro sentiment, governments have more-stable spending patterns. We see this affecting CGI’s performance both positively and negatively. When IT demand boomed during the pandemic, CGI’s growth was mostly in line with or slightly below that of its peers. However, as overall demand started to fade in late 2024, the trend reversed and CGI became one of the fastest-growing IT-services names. Given that government revenue tends to be stickier than revenue from private-sector customers, we believe CGI will continue to experience less cyclicality than other IT-services firms.