Accenture jumped 15.78% after its order book answered the AI question

Accenture

Accenture closed at US$212.30 on Thursday, up 15.78%, and was more than 20% higher at one point. Fourth-quarter revenue was US$18.7 billion, up 6%, against the US$18.05 billion analysts expected.

Accenture sells people's time, and AI was supposed to need less of it. About 814,000 people work there, building and running computer systems for big companies. The fear all year has been that AI tools would do much of that work, and clients would pay for fewer hours.

The order book says clients are still signing. Accenture booked a record US$84.5 billion of new work over the year. The fourth quarter alone brought 141 bookings worth US$100 million or more each.

Chart: Accenture's revenue kept rising while its market value fell from US$214.2bn to US$116.1bn by August. Revenue by year to August (columns, left scale) and market value at year end (line, right scale), US$bn, on two scales from zero. The line ends before Thursday's rally. — This story’s chart of the day: the numbers, the dark version and the animated version are on its own page. The chart’s page →

The mix is less comfortable. Outsourcing, where Accenture runs a client's systems for years at a time, made up US$12.8 billion of the quarter's US$22.2 billion in bookings. New consulting projects booked only as much work as they billed.

The other side

Accenture expects revenue to grow 3% to 6% in local currencies next year, no faster than the 5% it managed this year. Our read is that Thursday took the worst fear out of the price. The next number to watch is consulting, where bookings need to outrun revenue again, as they did over the full year.

This story ran in Billable Hours Survive Friday 2 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

General information and commentary only, not financial advice. It does not take account of your objectives, financial situation or needs, and reflects the author's own reading of public information at the time of writing, which may be wrong. Sharespective, its people and its clients may hold positions in the companies covered. Do your own research and talk to a licensed adviser.