Will Kyndryl’s (KD) AI Partnerships Offset Investor Worries About Stagnant Revenue Growth?

• Earlier this month, Kyndryl Holdings reported flat quarterly revenues that missed analyst expectations, leading to investor concerns despite a significant rise in net income to US$56 million for the first quarter of fiscal 2026.
• This news coincided with the announcement of expanded partnerships in artificial intelligence and private cloud solutions, including a broadened alliance with HPE and a new collaboration with Nova Intelligence, highlighting Kyndryl’s ongoing efforts to modernize client IT operations and accelerate digital transformation projects.
• We'll assess how concerns over lagging revenue growth, despite high-profile AI partnerships, may influence Kyndryl's investment outlook.

AI is about to change healthcare. These 24 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.

Kyndryl Holdings Investment Narrative Recap

To own Kyndryl Holdings, you must believe in the company’s ability to transition away from legacy IT contracts and secure new, higher-margin business through consulting, cloud, and AI-driven services. The recent earnings miss, with flat revenues despite improved net income, has not meaningfully shifted the main short-term catalyst, demonstrating sustained, high-quality revenue growth, while ongoing risk tied to legacy contracts and delayed deal closures remains front and center for investors.

Among recent announcements, Kyndryl’s expanded partnership with HPE, introducing enterprise AI solutions alongside NVIDIA technologies, stands out as particularly relevant. This move bolsters its offering in AI-driven private cloud services for highly regulated sectors like healthcare and financial services, supporting the company’s efforts to modernize its revenue base and target higher-growth, higher-margin opportunities in the near term.

By contrast, investors should remain aware that dependence on legacy contracts still exposes Kyndryl to the risk of ongoing revenue pressure from non-renewals and...

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

Kyndryl Holdings' outlook projects $16.7 billion in revenue and $1.1 billion in earnings by 2028. This scenario assumes 3.5% annual revenue growth and an $803 million increase in earnings from the current $297 million.

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

Exploring Other Perspectives

Simply Wall St Community members have weighed in with seven fair value estimates for Kyndryl, ranging from US$26.06 to US$77.31 per share. While investors see potential in Kyndryl’s pivot to cloud and AI, persistent concerns around legacy contract run-off could influence the company’s ability to consistently grow earnings; explore several views to understand the diversity of expectations.

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.

Ready For A Different Approach?

Opportunities like this don't last. These are today's most promising picks. Check them out now:

• The end of cancer? These 26 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's.
• Find companies with promising cash flow potential yet trading below their fair value.
• The latest GPUs need a type of rare earth metal called Neodymium and there are only 26 companies in the world exploring or producing it. Find the list for free.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com