Kyndryl (KD) Misses Q1 2026 Estimates but Can Its Digital Shift Offset Legacy Headwinds?

• Kyndryl Holdings recently reported its first quarter 2026 results, posting flat revenues of US$3.74 billion and net income of US$56 million, missing analyst expectations for both sales and earnings per share for the period ended June 30, 2025.
• Despite ongoing growth in AI and cloud service partnerships and efforts to improve operational efficiency, the company's muted revenue performance highlighted persistent risks related to legacy contracts and the pace of transitioning to higher-margin offerings.
• We'll examine how the disappointing quarterly earnings and slower revenue momentum shape the outlook for Kyndryl's digital transformation-driven investment narrative.

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Kyndryl Holdings Investment Narrative Recap

To be a shareholder in Kyndryl Holdings, you need to believe the company can successfully shift away from legacy, lower-margin contracts toward higher-value consulting, cloud, and AI-powered services. The recent earnings miss and sharp share price decline bring the risk of ongoing revenue erosion from legacy renewals into sharper focus, making near-term revenue stability even more important as a catalyst for stock performance. That said, the miss does not materially change the importance of accelerating the transition to higher-margin revenue streams.

Among Kyndryl's latest announcements, the expanded alliance with HPE and NVIDIA to deliver private cloud AI stands out. This partnership underscores the company's focus on higher-growth service offerings that directly address the market’s demand for AI and digital transformation. Its relevance is clear, new AI and cloud partnerships are key for generating new business to counterbalance the slow drag from existing contracts.

But even as new partnerships take shape, investors need to be aware that underlying risks tied to existing legacy accounts remain a persistent source of...

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

Kyndryl Holdings is projected to deliver $16.7 billion in revenue and $1.1 billion in earnings by 2028. This outlook assumes annual revenue growth of 3.5% and an increase in earnings of $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 Simply Wall St Community fair value estimates for Kyndryl range from US$26.06 to US$77.16 per share. While some see upside potential, the continued risk of legacy contract revenue declines shapes how you might weigh these opinions against recent developments.

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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