Looking back on it services & consulting stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including EPAM (NYSE: EPAM) and its peers.

IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.

The 8 it services & consulting stocks we track reported a mixed Q3. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.

In light of this news, share prices of the companies have held steady as they are up 3.1% on average since the latest earnings results.

EPAM (NYSE: EPAM)

Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE: EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.

EPAM reported revenues of $1.39 billion, up 19.4% year on year. This print exceeded analysts’ expectations by 1.4%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EPS guidance for next quarter estimates and an impressive beat of analysts’ full-year EPS guidance estimates.

"We are pleased to deliver another quarter of improving year-over-year organic constant currency revenue growth, driven by our deep engineering expertise and focus on helping clients build out their AI foundation and transform themselves into AI-Native organizations," said Balazs Fejes, CEO and President at EPAM.

EPAM scored the fastest revenue growth but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 15.4% since reporting and currently trades at $185.75.

We think EPAM is a good business, but is it a buy today? Read our full report here, it’s free for active Edge members.

Best Q3: IBM (NYSE: IBM)

With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.

IBM reported revenues of $16.33 billion, up 9.1% year on year, outperforming analysts’ expectations by 1.4%. The business had a very strong quarter with a solid beat of analysts’ operating income estimates and a beat of analysts’ EPS estimates.

IBM scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 6.1% since reporting. It currently trades at $304.99.

Is now the time to buy IBM? Access our full analysis of the earnings results here, it’s free for active Edge members.

Slowest Q3: Grid Dynamics (NASDAQ: GDYN)

With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ: GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.

Grid Dynamics reported revenues of $104.2 million, up 19.1% year on year, in line with analysts’ expectations. It was a softer quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and EPS in line with analysts’ estimates.

Interestingly, the stock is up 16.3% since the results and currently trades at $8.84.

Read our full analysis of Grid Dynamics’s results here.

DXC (NYSE: DXC)

Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.

DXC reported revenues of $3.16 billion, down 2.5% year on year. This result was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a significant miss of analysts’ EPS guidance for next quarter estimates.

DXC achieved the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 1.2% since reporting and currently trades at $13.10.

Read our full, actionable report on DXC here, it’s free for active Edge members.

ASGN (NYSE: ASGN)

Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE: ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.

ASGN reported revenues of $1.01 billion, down 1.9% year on year. This print beat analysts’ expectations by 0.7%. Taking a step back, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a slight miss of analysts’ EPS guidance for next quarter estimates.

The stock is down 5.7% since reporting and currently trades at $45.59.

Read our full, actionable report on ASGN here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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