Kyndryl (KD): Evaluating Valuation After New AI-Powered Aviation and Industry Cloud Launches

Kyndryl Holdings (NYSE:KD) has rolled out its Aviation Industry Cloud Solution, an AI-powered platform developed with Google Cloud, along with new sector-focused offerings built on its Agentic AI framework. These announcements highlight Kyndryl’s push into enterprise modernization and industry-specific cloud solutions.

See our latest analysis for Kyndryl Holdings.

Kyndryl’s big push into next-gen AI infrastructure comes as its share price has fallen more than 28% over the past 90 days, even though the 1-year total shareholder return sits at an impressive 12.7% and the three-year figure rises to 222%. While recent launches with Google Cloud have generated excitement, market sentiment has cooled a bit in the short term. However, Kyndryl’s strong long-term numbers highlight the substantial progress from its legacy IT roots toward growth-focused, sector-specific solutions.

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With the stock trading at a substantial discount to analyst targets but recent momentum waning, the key question is whether Kyndryl is now a bargain poised for upside or if the market has already priced in future growth.

Most Popular Narrative: 34.9% Undervalued

With the most followed narrative estimating Kyndryl Holdings’ fair value at $43, well above its last close of $28, a substantial valuation gap is in focus as the company pivots to higher-margin growth initiatives.

The company's focus on expanding AI, data, and cybersecurity services, supported by investments in proprietary initiatives like Kyndryl Bridge and new alliances such as Databricks, is allowing Kyndryl to address rising complexity and security requirements. This supports both higher margins and new revenue streams.

Read the complete narrative.

Ever wondered what’s fueling this big discount? The narrative hinges on ambitious, margin-expanding transformation and future profit leaps. Uncover the key numbers the market might be missing.

Result: Fair Value of $43 (UNDERVALUED)

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

However, ongoing reliance on legacy contracts and unpredictable timing of large deal renewals could quickly pressure Kyndryl’s revenue growth and margin progress.

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

Another View: What Do Valuation Ratios Say?

While analyst targets and fair value estimates point to Kyndryl being deeply undervalued, its price-to-earnings ratio of 21.8x sits well below the US IT industry average of 31.7x. However, it remains above close peer averages at 14.4x. Compared to a fair ratio of 53.2x, there appears to be meaningful upside if the market re-rates upward, but also a risk of alignment with peers if confidence lags. Is the gap an opportunity, or caution from the market?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Kyndryl Holdings Narrative

If you see things differently or want to dig into the numbers on your own terms, you can easily craft your own story in just a few minutes: Do it your way

A great starting point for your Kyndryl Holdings research is our analysis highlighting 3 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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