Has the Recent AI Investment Wave Changed the Outlook for Accenture in 2025?

If you have been staring at Accenture’s stock price, wondering if now is the right time to make a move, you are definitely not alone. Plenty of investors are reassessing their positions after a bumpy ride over the last year. Let’s be honest: seeing a share that’s been down nearly 22% over the past twelve months can make anyone second-guess their confidence. But if you take a step back, things get more interesting. Despite the recent turbulence, Accenture's five-year return is up over 14%, and just in the last week, shares have bounced back by about 3.8%.

So what’s behind these swings? A lot of it ties back to evolving market sentiment on tech and consulting giants, and recent macro shifts have made risk feel, well, riskier. However, Accenture’s revenue and net income are still growing at a healthy annual pace, up about 5.4% and 7.3% respectively. These aren’t blockbuster numbers, but they are steady and almost reassuring in a sector where volatility can catch even the seasoned investors off guard.

Here’s where it gets compelling for value seekers: Accenture is currently undervalued in 5 out of 6 major checks, earning it a valuation score of 5. That’s impressive, and it suggests the market might not be giving this company the credit it deserves. If you are weighing your next step, let’s break down those valuation methods used to get this score, and stay tuned, because there’s an even sharper way to size up Accenture’s value coming up later.

Accenture delivered -22.1% returns over the last year. See how this stacks up to the rest of the IT industry.

Approach 1: Accenture Cash Flows

The Discounted Cash Flow (DCF) model estimates what a business is worth by projecting its future cash flows and then discounting those figures back to their present value. This approach gives investors a grounded, numbers-driven sense of a company's true value, beyond headline-moving news and day-to-day price swings.

For Accenture, the latest twelve-month Free Cash Flow is approximately $10.35 billion. Looking ahead, analysts are forecasting steady growth, with free cash flow projections rising to around $16.14 billion by 2035. This gradual and reliable growth is important for a service-driven tech company and aligns with Accenture's long-term trend of resilience.

Based on these projections, Accenture’s estimated intrinsic value using a Two Stage Free Cash Flow to Equity model is $298.78 per share. In comparison to the company’s current price, the DCF suggests Accenture is 14.6% undervalued. This indicates there may be potential upside if the market eventually prices the stock closer to its intrinsic value.

Result: UNDERVALUED

Our DCF analysis suggests Accenture is undervalued by 14.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Accenture Price vs Earnings

For companies like Accenture that consistently generate profits, the Price-to-Earnings (PE) ratio is a go-to measure for valuation. It allows investors to quickly gauge how much the market is willing to pay for each dollar of current earnings. PE ratios also factor in growth outlook and risk profiles, so higher expectations or lower risk typically support a higher “normal” or “fair” PE multiple.

Right now, Accenture trades at a PE ratio of 20.1x. For context, this is below both the broader IT industry average of 29.7x and the peer group average of 21.1x. Another relevant measure is the “Fair Ratio,” which is a custom benchmark that accounts for Accenture’s future earnings growth, profit margins, industry landscape, company size and risk factors. According to this metric, Accenture’s fair PE ratio stands at 38.3x.

With Accenture’s actual PE ratio well below its Fair Ratio, the numbers suggest investors may be underestimating the company’s quality and growth prospects. This gap points toward undervaluation based on the earnings multiple method.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Accenture Narrative

Narratives are a fresh and approachable way to invest, letting you craft a story from your perspective about a company that connects directly to the numbers, such as its fair value and projections for future revenues, earnings, and margins.

Rather than looking at a static fair value, Narratives invite you to link Accenture’s business story, including its industry position, growth drivers, and risks, to a tailored financial forecast and arrive at your own fair value estimate. On Simply Wall St, millions of investors use Narratives to simplify and personalize investment decisions, making it easy to compare your outlook with the community and adjust as the facts change.

With Narratives, you can quickly see the gap between what you believe Accenture is truly worth and its current market price, helping you decide if it’s time to buy, hold, or sell. In addition, as soon as new developments or earnings are released, Narratives update in real time, so your view stays relevant and actionable.

For example, while some investors see a fair value for Accenture as low as $202 based on conservative growth assumptions, others with a more optimistic view peg it above $343. This demonstrates that the “right price” is often a matter of perspective supported by your Narrative.

For Accenture, we'll make it really easy for you with previews of two leading Accenture Narratives: 🐂 Accenture Bull Case Fair value: $343.90 Current valuation: 25.8% undervalued Expected revenue growth: 7.5%

• Highlights substantial momentum in generative AI and cloud services, with strong new bookings and ongoing growth investments across various segments such as security and retirement services.
• Projects robust revenue and earnings increases for the period 2027 to 2034, with expanding profit margins and confident outlooks across public sector, health care, and capital projects.
• Notes that risks include macroeconomic headwinds, sector-specific slowdowns, and the challenge of clients adopting new technologies at scale. However, innovation and diversification are expected to help offset these risks.

🐻 Accenture Bear Case Fair value: $202.38 Current valuation: 26.0% overvalued Expected revenue growth: 5.4%

• Views Accenture as solid but currently priced above its fair value following a sector re-rating, despite healthy profitability, free cash flow, and capital returns such as dividends and buybacks.
• Sees continued profit margin strength and robust growth from generative AI services, but flags bookings declines and persistent macro and sector caution as near-term risks.
• Cautions that recent share price weakness reflects elongated decision cycles and lowered bookings momentum, meaning that any upside depends on seeing a turnaround or sustained improvements in new contracts.

Do you think there's more to the story for Accenture? Create your own Narrative to let the Community know!

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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