A Look at Kyndryl Holdings’s Valuation Following Major AI Investment Plans in India

If you’re tracking Kyndryl Holdings (NYSE:KD), you’ll know this week wasn’t just any other week. The company has drawn the spotlight with its commitment to pour $2.25 billion into India, promising a broad boost to technology modernization, AI innovation, and digital skills development. With Kyndryl rolling out a new AI lab and strengthening its collaboration with India’s government, the scale and intent of this move signal a clear strategy to anchor itself at the heart of India’s digital transformation, an arena that is only set to grow in importance over the next decade.

Market action has been lively in the wake of this news. Kyndryl’s stock has soared 39% over the past year, a sharp contrast to declines seen over the last quarter, hinting that momentum from this expansion could be shifting investor sentiment back in the company’s favor. Other recent moves, such as expanding AI partnerships with Hewlett Packard Enterprise and integrating NVIDIA technologies, speak to a bigger push by Kyndryl into high-demand tech domains, even as it continues to manage challenges from its legacy business lines.

The question now is whether Kyndryl’s commitment to India marks a genuine buying opportunity, or if the market has already priced in the company’s next phase of growth. What’s your move?

Most Popular Narrative: 31.3% Undervalued

The prevailing narrative suggests that Kyndryl Holdings is significantly undervalued based on its future earnings growth, profit margins, and other risk factors.

The accelerating adoption of hybrid and multi-cloud environments is fueling demand for Kyndryl's advanced integration and management services. This is evidenced by a 44% year-over-year increase in signings and substantial growth in hyperscaler-related revenues, which supports ongoing revenue expansion and a higher recurring revenue base.

This narrative hints at an ambitious projection built on surging recurring revenues and margin expansion that may not yet be fully reflected in the share price. Want to know what bold assumptions underpin the target price? Find out how changing profit margins and carefully tuned growth forecasts could reprice the stock in this widely-followed outlook.

Result: Fair Value of $46.25 (UNDERVALUED)

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

However, risks remain, including ongoing reliance on legacy contracts and uncertainty from deal delays. These factors could challenge Kyndryl’s expected revenue growth trajectory.

Find out about the key risks to this Kyndryl Holdings narrative.

Another View: Discounted Cash Flow Perspective

Taking a step back from analyst price targets, our DCF model also suggests Kyndryl could be meaningfully undervalued. However, models are only as strong as their assumptions. This raises the question: how reliable is this second take?

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 Kyndryl Holdings 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 Kyndryl Holdings Narrative

If you have a different perspective or prefer to shape your own view, it’s quick and simple to dig into the numbers yourself and share your findings. Do it your way

A great starting point for your Kyndryl Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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