Cognizant Q2 Earnings Call Focuses on AI Builder Shift

CTSH Advances AI Builder Strategy

CEO Ravi Kumar S said that Cognizant is accelerating its shift toward becoming an AI builder by developing new platforms, expanding talent capabilities and helping clients move AI projects into production.

Management highlighted over 8,000 AI engagements and more than 40% of software development is now AI-assisted. The company also emphasized its AI Delivery Operating System, designed to combine engineering expertise, business knowledge and AI capabilities.

The company’s AI strategy focuses on improving traditional work through automation, modernizing existing processes with AI and creating new AI-enabled business models. Management said that these areas represent expanding opportunities beyond traditional systems integration.

Cognizant Sees Demand From AI Execution

Cognizant reported revenue growth of 4.5% year over year, or 4.1% in constant currency, with Financial Services leading performance. The segment grew 12% year over year, supported by AI adoption and modernization programs.

CFO Jatin Dalal said that demand remains strongest in areas tied to data, cybersecurity and industry-specific AI transformation. He noted that clients are prioritizing modernization projects with measurable returns.

In the analyst Q&A, a JPMorgan analyst asked whether Financial Services could remain a leading indicator for broader industry adoption. Ravi Kumar said that the segment’s technology focus and AI readiness position it as an early adopter of the company’s strategy.

CTSH Builds Platform and Talent Base

CTSH completed its acquisition of Astreya during the quarter, adding managed services capabilities focused on IT infrastructure, enterprise networks and AI-enabled operations. Management said that the acquisition supports its AI infrastructure strategy.

The company is also expanding its Frontier workforce model, including plans to scale to 5,000 Frontier Certified Engineers and 10,000 Frontier Business Operators. These roles are designed around integrating AI agents with business workflows.

Management highlighted partnerships with Google Cloud, Anthropic and OpenAI as part of its effort to expand AI delivery capabilities and create reusable enterprise solutions.

Cognizant Maintains Deal Momentum

Cognizant’s trailing 12-month bookings increased 5% to $29.1 billion, representing a book-to-bill ratio of approximately 1.3x. The company signed seven large deals with total contract values above $100 million during the quarter.

Ravi Kumar said that bookings momentum improved across larger deal categories, with Financial Services showing particularly strong activity. He also noted increased new business contribution during the first half of the year.

A William Blair analyst asked about the pace of large deal ramps and second-half expectations. Management said that recent bookings activity and deal transitions support continued momentum through the remainder of the year.

CTSH Balances Growth and Efficiency

CTSH expanded adjusted operating margin to 16%, up 40 basis points year over year. The company recorded $84 million in Project Leap costs during the quarter while benefiting from an $81 million partial reversal related to India defined contribution obligations.

Management said that Project Leap remains on track, with full-year benefits expected in 2027. The program is intended to improve operating efficiency while supporting a more AI-enabled delivery model.

The company also returned capital to shareholders, deploying $1.1 billion on share repurchases during the quarter. Year to date, Cognizant has returned $1.9 billion through repurchases and dividends.

Cognizant Updates Outlook and Priorities

Cognizant lowered its full-year 2026 constant currency revenue growth outlook to 4% to 5.5% from prior expectations, citing continued macro uncertainty and cautious discretionary spending. Adjusted operating margin guidance remained 16% to 16.2%.

The company raised adjusted EPS guidance to $5.70 to $5.82, representing 8% to 10% growth. Management maintained its focus on margin expansion, AI investments and disciplined acquisitions.

Ravi Kumar said that Cognizant remains focused on scaling AI-led services, outcome-based engagements and platform offerings as clients move from AI experimentation toward broader deployment.

Zacks Signals Point to a Mixed Setup

Presently, Cognizant carries a Zacks Rank #3 (Hold), indicating the stock is expected to perform in line with the broader market based on current earnings estimate trends. The Zacks Rank can change as analysts revise earnings estimates following new company developments. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has a Value Score of A, a Growth Score of B, a Momentum Score of F and a VGM Score of B. Zacks Style Scores are designed as complementary indicators, with higher grades representing stronger characteristics within each style category.

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