Kyndryl Holdings (KD) Triples Net Income on Flat Sales—How Sustainable Are These Efficiency Gains?

• Kyndryl Holdings recently reported its first quarter 2026 results, with net income increasing to US$56 million on sales of US$3.74 billion, up from US$11 million a year earlier.
• This strong profit growth occurred despite sales remaining nearly flat year-over-year, highlighting efficiency improvements that contributed to a significant rise in earnings per share.
• We'll assess how Kyndryl's meaningful earnings surprise and margin expansion could influence the company's longer-term investment narrative.

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Kyndryl Holdings Investment Narrative Recap

To own shares in Kyndryl, you need to believe in its ability to convert operational improvements and strategic partnerships into sustainable earnings growth, even as revenue remains flat amid intense IT services competition. The most recent quarterly earnings solidified the idea that efficiency gains can drive greater profitability, but did not materially reduce the short-term risk around the challenge of exiting low-margin contracts while defending or expanding market share.

Among this quarter's corporate updates, Kyndryl’s new partnership with Nova Intelligence stands out, directly complementing profit-focused efforts by leveraging AI-driven solutions for SAP migrations. This shows the company’s ongoing commitment to expanding its modernization services and strengthening its appeal with enterprise clients, which could act as an important catalyst for future revenue and margin performance.

But despite these operational advances, investors should also pay close attention to the ongoing risk that comes from...

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

Kyndryl Holdings' outlook anticipates $16.5 billion in revenue and $935.9 million in earnings by 2028. This scenario assumes a 3.0% annual revenue growth rate and an earnings increase of $683.9 million from the current earnings of $252.0 million.

Uncover how Kyndryl Holdings' forecasts yield a $47.08 fair value, a 63% upside to its current price.

Exploring Other Perspectives

Six fair value estimates from the Simply Wall St Community place Kyndryl’s value between US$28.57 and US$173.56 per share. With margin improvement as a key earnings catalyst, it is clear views on future profitability diverge, so consider several different opinions before acting.

Explore 6 other fair value estimates on Kyndryl Holdings - why the stock might be worth over 5x more 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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