Assessing NTT DATA Group (OTCPK:NTDT.Y) Valuation After New Multi Year AWS Cloud And AI Collaboration

NTT DATA Group (OTCPK:NTDT.Y) is in focus after announcing a multi year collaboration with Amazon Web Services to support cloud modernization, agentic AI adoption and digital sovereignty solutions for global enterprises.

See our latest analysis for NTT DATA Group.

The AWS agreement comes after a softer patch in the share price, with a 1-day share price return of a 4% decline and a 7-day share price return of a 4% decline, while the year-to-date share price return of 6.43% and 1-year total shareholder return of 27.59% point to momentum that has built over a longer horizon.

If this kind of cloud and AI story has your attention, it could be a good moment to scan high growth tech and AI stocks for other names shaping that theme.

With a 1 year total return of 27.59% and 3 year and 5 year returns above 67%, alongside a recent patch of weaker short term moves, the central question is whether NTT DATA is still mispriced or if the market is already factoring in future growth.

Preferred P/E of 28.6x: Is it justified?

At a last close of $24.00, NTT DATA Group is trading on a P/E of 28.6x, which screens as slightly cheaper than the broader US IT sector but richer than its closest peer set.

P/E compares the current share price to earnings per share and is a common way to see how much investors are paying for each dollar of earnings in IT and software services. For a company offering consulting, cloud and managed services, it often reflects how durable investors think those earnings are and how confident they are that profits can keep growing.

Here, the 28.6x P/E sits below the US IT industry average of 29.7x, which points to a small discount, while still sitting above the peer average of 21.6x, which points to a premium. The estimated fair P/E of 33.3x is higher again, which suggests a level the market could potentially move toward if current assumptions on earnings growth and quality hold.

Explore the SWS fair ratio for NTT DATA Group

Result: Price-to-Earnings of 28.6x (ABOUT RIGHT)

However, short term share price weakness and any slowdown in annual revenue or net income growth could challenge the idea that the current P/E still offers value.

Find out about the key risks to this NTT DATA Group narrative.

Build Your Own NTT DATA Group Narrative

If you read this and feel differently, or simply want to test your own view against the data, you can quickly build a tailored thesis yourself. To get started, use Do it your way.

A great starting point for your NTT DATA Group research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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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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