A Look at Amdocs (DOX) Valuation Following Strategic AI-Driven Deal with Optimum

Investors watching Amdocs (NasdaqGS:DOX) got fresh news to consider as the company announced an expanded multi-year deal with Optimum, aiming to overhaul the telecom provider’s billing infrastructure with AI-powered solutions. This is not just another contract. Amdocs is set to implement new digital tools such as an AI-powered Bill Presenter and a GenAI Care Agent, deepening its footprint in the fast-evolving world of telecommunications AI. With long-term, recurring revenue and high margins included in the agreement, the move underscores the company’s drive to position itself at the heart of telecom modernization.

So far this year, Amdocs has delivered only modest gains, and the latest quarter has seen the share price slip about 8%. The bigger picture, however, offers a steadier climb, with a total return of 61% over the past five years, reflecting the staying power of its core business. This latest Optimum partnership comes as the company continues to highlight annual revenue growth and improved profitability, keeping investors focused on long-term momentum rather than short-term swings.

After a pause in the stock’s rally, is Amdocs offering compelling value after this deal, or has the market already priced in its future AI growth story?

Most Popular Narrative: 18.3% Undervalued

According to the most widely followed valuation narrative, Amdocs is significantly undervalued. Analysts anticipate an upside based on future earnings and margin expansion.

The accelerating adoption of cloud, automation, and AI/ML across telecom and media sectors is driving a multi-year wave of IT stack modernization. Amdocs is winning new large-scale modernization and migration deals in cloud, generative AI, and data services, which is expanding its total addressable market and supporting sustained topline revenue growth.

Curious what makes analysts so bullish on Amdocs’ potential? Discover the high-stakes assumptions underlying this valuation, including evolving profit margins, optimistic revenue trends, and a much lower future earnings multiple than most expect. One key factor could make or break the story. Want to know what it is? Explore the full narrative to see the financial projections that drive this target value.

Result: Fair Value of $104.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent uncertainty in telco capital spending and Amdocs' reliance on a few key telecom clients could place constraints on future revenue growth.

Find out about the key risks to this Amdocs narrative.

Another View: Our DCF Model

A different lens comes from the SWS DCF model, which examines Amdocs’ long-term cash flows and fundamentals. This approach also points to undervaluation. The key question is whether future growth and margins will meet expectations, or if the market is being too optimistic.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Amdocs for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Amdocs Narrative

If you have your own interpretation or want to dig into the numbers yourself, building a personal narrative takes just a few minutes. Do it your way

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Amdocs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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