Looking back on it services & consulting stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Kyndryl (NYSE: KD) and its peers.

IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.

The 8 it services & consulting stocks we track reported a mixed Q3. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.

Luckily, it services & consulting stocks have performed well with share prices up 11.6% on average since the latest earnings results.

Kyndryl (NYSE: KD)

Born from IBM's managed infrastructure services business in a 2021 spinoff, Kyndryl (NYSE: KD) is the world's largest IT infrastructure services provider that designs, builds, and manages technology environments for enterprise customers.

Kyndryl reported revenues of $3.72 billion, down 1.4% year on year. This print fell short of analysts’ expectations by 2.9%. Overall, it was a slower quarter for the company with a significant miss of analysts’ revenue estimates.

"Our second quarter performance reflects the momentum we're building across key growth priorities – Kyndryl Consult, alliances with hyperscalers and other leading technology providers, and our innovative services in AI, cloud and security. We expect activity to strengthen in the second half of fiscal 2026, supported by our pipeline and the constructive discussions we're having with new and existing customers," said Kyndryl Chairman and Chief Executive Officer Martin Schroeter.

Kyndryl delivered the weakest performance against analyst estimates of the whole group. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $27.42.

Read our full report on Kyndryl here, it’s free for active Edge members.

Best Q3: IBM (NYSE: IBM)

With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE: IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.

IBM reported revenues of $16.33 billion, up 9.1% year on year, outperforming analysts’ expectations by 1.4%. The business had a very strong quarter with a solid beat of analysts’ operating income estimates and a beat of analysts’ EPS estimates.

IBM achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 8.6% since reporting. It currently trades at $312.19.

Is now the time to buy IBM? Access our full analysis of the earnings results here, it’s free for active Edge members.

Grid Dynamics (NASDAQ: GDYN)

With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ: GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.

Grid Dynamics reported revenues of $104.2 million, up 19.1% year on year, in line with analysts’ expectations. It was a softer quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and EPS in line with analysts’ estimates.

Interestingly, the stock is up 32.8% since the results and currently trades at $10.09.

Read our full analysis of Grid Dynamics’s results here.

EPAM (NYSE: EPAM)

Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE: EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.

EPAM reported revenues of $1.39 billion, up 19.4% year on year. This result beat analysts’ expectations by 1.4%. It was a strong quarter as it also logged a solid beat of analysts’ EPS guidance for next quarter estimates and an impressive beat of analysts’ full-year EPS guidance estimates.

EPAM pulled off the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is up 31.4% since reporting and currently trades at $211.41.

Read our full, actionable report on EPAM here, it’s free for active Edge members.

DXC (NYSE: DXC)

Born from the 2017 merger of Computer Sciences Corporation and HP Enterprise's services business, DXC Technology (NYSE: DXC) is a global IT services company that helps businesses transform their technology infrastructure, applications, and operations.

DXC reported revenues of $3.16 billion, down 2.5% year on year. This print was in line with analysts’ expectations. More broadly, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a significant miss of analysts’ EPS guidance for next quarter estimates.

DXC achieved the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is up 16.8% since reporting and currently trades at $15.12.

Read our full, actionable report on DXC here, it’s free for active Edge members.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

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