How Kyndryl's (KD) Expanded HPE Partnership and New AI Initiatives Are Shaping Its Investment Story

• In August 2025, Kyndryl Holdings announced the expansion of its global partnership with HPE to deliver AI private cloud solutions, and a collaboration with Nova Intelligence to accelerate AI-driven SAP transformations, alongside reporting first-quarter sales of US$3.74 billion and net income of US$56 million.
• These developments underscore Kyndryl's push into advanced AI and cloud services, while also highlighting operational progress through earnings growth and active share repurchases.
• We'll explore how Kyndryl's expanded HPE alliance and AI-driven offerings could influence the company's growth narrative and analyst outlook.

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Kyndryl Holdings Investment Narrative Recap

To be a shareholder in Kyndryl now, you need to believe that its push into advanced AI and cloud solutions will offset pressure from legacy contract attrition, driving the transition to higher-margin business. The latest partnerships with HPE and Nova Intelligence give Kyndryl fresh tools to capture ongoing demand in enterprise AI and digital transformation, but whether these alliances are enough to materially accelerate near-term revenue growth, and reduce ongoing lumpiness from legacy contracts, remains to be seen. The biggest risk remains persistent revenue drag from expiring legacy deals and delays in replacement signings.

The recently expanded partnership with HPE to deliver AI private cloud services is particularly relevant, as it squarely targets Kyndryl’s largest growth catalysts: AI and digital modernization for enterprise customers. As the company aims to move away from legacy contracts that still form a substantial part of its revenue base, this HPE alliance could help drive more predictable, higher-margin contract flow. Yet, fresh risks emerge if adoption or deal timing with new customers fails to offset legacy shortfalls.

But despite headline-grabbing AI alliances, investors should also be aware of ongoing volatility from legacy contract wind-downs and delays in new deal closures...

Read the full narrative on Kyndryl Holdings (it's free!)

Kyndryl Holdings is projected to reach $16.7 billion in revenue and $1.1 billion in earnings by 2028. This scenario is based on a 3.5% annual revenue growth rate and an increase in earnings of about $803 million from current earnings of $297 million.

Uncover how Kyndryl Holdings' forecasts yield a $46.25 fair value, a 51% upside to its current price.

Exploring Other Perspectives

Seven members of the Simply Wall St Community estimate Kyndryl’s fair value from US$26.06 to US$75.93. While many focus on forward AI growth, persistent risk from legacy revenues remains an important factor that could affect outcomes.

Explore 7 other fair value estimates on Kyndryl Holdings - why the stock might be worth 15% less than the current price!

Build Your Own Kyndryl Holdings Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Kyndryl Holdings research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Kyndryl Holdings research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Kyndryl Holdings' overall financial health at a glance.

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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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