Financial Performance - Third quarter revenues reached $1.394 billion, representing a year-over-year increase of 19.4%[5] - GAAP diluted EPS for the third quarter was $1.91, a decrease of 19.4% compared to $2.37 in the same quarter of 2024[6] - Non-GAAP diluted EPS was $3.08, down 1.3% from $3.12 in the third quarter of 2024[6] - Expected GAAP diluted EPS for the full year is projected to be in the range of $6.75 to $6.83[8] - The company anticipates fourth quarter revenues to be between $1.380 billion and $1.395 billion, reflecting year-over-year growth of 11.1%[8] - Revenue growth reported for the three months ended September 30, 2025, was 19.4%, while organic constant currency revenue growth was 7.1%[22] - Net income for the three months ended September 30, 2025, was $171,794 thousand, compared to $179,086 thousand for the same period in 2024, reflecting a decrease of 4.3%[22] - Diluted earnings per share for the three months ended September 30, 2025, was $3.08, down from $3.12 in the same period of 2024[22] - Expected revenue growth for Q4 2025 is projected at 11.1%, with an organic constant currency growth of 4.4%[30] - Full year 2025 revenue growth is expected to be 15.0%, with organic constant currency growth at 4.6%[30] Shareholder Actions - The company repurchased $82.1 million of stock in the third quarter and announced a new share repurchase plan for up to $1 billion[5] Operational Metrics - Total headcount as of September 30, 2025, was approximately 62,350, with a 0.5% increase in delivery professionals since June 30, 2025[8] - Cash provided by operating activities for the first nine months of 2025 was $372.0 million, down from $428.9 million in the same period of 2024[8] - Operating margin for the three months ended September 30, 2025, was 10.4%, down from 15.2% in the same period of 2024[22] - GAAP income from operations as a percentage of revenues for Q4 2025 is estimated to be between 10.0% and 11.0%[30] - Non-GAAP income from operations as a percentage of revenues for Q4 2025 is projected to be between 15.5% and 16.5%[30] Tax and Expenses - The company expects a GAAP effective tax rate of approximately 25.0% for the full year[8] - The effective tax rate for GAAP is approximately 24.0% for Q4 2025, while the non-GAAP effective tax rate is approximately 23.0%[30] - Stock-based compensation expenses for the three months ended September 30, 2025, were $21,149 thousand, up from $19,576 thousand in the same period of 2024, an increase of 8.0%[23] - Stock-based compensation expenses are expected to be 3.2% of revenues for the full year 2025[30] Balance Sheet - Total assets increased to $4,843,300 thousand as of September 30, 2025, up from $4,750,473 thousand at December 31, 2024, representing a growth of 1.96%[21] - Total current liabilities increased to $835,262 thousand as of September 30, 2025, compared to $821,039 thousand at December 31, 2024, an increase of 1.5%[21] - Total equity increased to $3,726,843 thousand as of September 30, 2025, compared to $3,631,151 thousand at December 31, 2024, an increase of 2.6%[21] Other Initiatives - The company has committed $100 million for humanitarian support in Ukraine, which includes expenses related to the ongoing crisis[24] - The company incurred $11,028 thousand in cost optimization charges during the three months ended September 30, 2025, related to restructuring initiatives[25] - The impact of foreign exchange rates is expected to reduce revenue growth by 2.4% in Q4 2025[30] - Inorganic revenue growth is anticipated to decline by 4.3% for Q4 2025[30]

Core Insights - EPAM Systems, Inc. has launched Agentic QA™, an AI-native testing solution aimed at addressing the challenges of accelerated software and product development cycles [2][3] - The solution integrates AI capabilities with traditional testing methods to enhance efficiency, scalability, and reduce testing efforts for clients [1][3] Company Overview - EPAM Systems, Inc. has been a leader in digital engineering and transformation services since 1993, focusing on software engineering expertise to help clients navigate transformation challenges [6][8] - The company emphasizes the integration of AI technologies into business strategies to drive innovation and competitive advantage [7][8] Industry Context - The demand for innovative testing solutions is growing as organizations face limitations with traditional testing methods, which are often inadequate for modern software development needs [2][4] - According to Gartner, test automation, particularly enhanced by generative AI technologies, is becoming essential for software engineering leaders to mitigate business risks [4][12]

Group 1 - The article focuses on value investing in Asia, particularly in the Hong Kong market, targeting stocks with significant discrepancies between price and intrinsic value [1] - The investment strategy emphasizes deep value balance sheet bargains, such as net cash stocks and low price-to-book (P/B) stocks, as well as wide moat stocks that represent high-quality businesses [1] - The author provides monthly updates and watch lists for value investors seeking investment opportunities in the region [1]

Core Insights - The article highlights three companies that present strong investment opportunities despite rising valuations in the AI sector [1][2] Company Summaries Amazon - Amazon's cloud computing division, Amazon Web Services (AWS), is experiencing significant growth, with AI services becoming a multibillion-dollar business growing at triple-digit rates year over year [5][8] - AWS revenue grew 17% year over year last quarter, although some analysts express concerns about its growth rate compared to competitors [5] - The company is investing heavily in AI infrastructure, with capital expenditures expected to exceed $100 billion this year, impacting free cash flow, which fell to $18.2 billion from $53 billion in the previous year [7] - Amazon's retail operations are also thriving, with North America operating margin increasing by 190 basis points to 7.5% and international margin expanding by 290 basis points to 3.4% [8] EPAM Systems - EPAM Systems focuses on platform and application engineering and has restructured its workforce to mitigate risks from political turmoil in Belarus, Russia, and Ukraine [9][10] - The company has seen a turnaround with 18% year-over-year revenue growth in the second quarter, marking the third consecutive quarter of sequential growth [11] - EPAM is positioned to benefit from the rising demand for AI services, with expectations of 13% to 15% growth for the full year [11][12] - The stock is trading at 12.5 times analysts' estimates for 2026 earnings, indicating it is undervalued [12] ASML - ASML manufactures essential equipment for advanced semiconductor production, crucial for AI applications [14] - The company has strong demand for its extreme ultraviolet (EUV) machines, with management expecting 2026 sales to exceed 2025 levels despite challenges in the Chinese market [15][19] - ASML's stock trades at around 34 times 2026 earnings expectations, reflecting its long-term growth potential in the semiconductor industry [19]

Core Insights - EPAM Systems, Inc. has launched the AI/Run.Transform Playbook, aimed at facilitating enterprise-wide AI-native transformation through integrated consulting services [1][2][4] Group 1: AI/Run.Transform Playbook Overview - The AI/Run.Transform Playbook is a next-generation model that combines AI-native delivery, strategic consulting, and established technical expertise to accelerate AI adoption [2][3] - This playbook integrates methodologies, blueprints, tools, and accelerators to ensure meaningful AI adoption and faster revenue generation compared to traditional methods [4][5] Group 2: Strategic Importance - The playbook is designed to align technical and business strategies, addressing a critical industry need for organizations to fully realize AI's transformation potential [4][5] - EPAM aims to redefine how enterprises innovate and operate in the AI era, setting a foundation for future talent needs [5][8] Group 3: Methodologies and Tools - The playbook includes AI/Run.Blueprints, AI/Run.Talent, and AI/Run.Tools, which provide frameworks, critical thinking, and proprietary platforms to enhance AI-native delivery [7][9] - By embedding agentic workflows into the software development lifecycle (SDLC), the playbook standardizes critical elements to drive consistent and scalable results [4][5]

Core Insights - EPAM Systems, Inc. is a digital platform engineering and software development services provider with a market cap of $8.6 billion, operating globally across the Americas, Indo-Pacific, and EMEA regions [1] Financial Performance - Analysts expect EPAM to report a non-GAAP profit of $2.42 per share for Q3, reflecting a 13.9% decline from $2.81 per share in the same quarter last year [2] - For the full fiscal year 2025, adjusted EPS is projected to be $8.73, down 1.6% from $8.87 in fiscal 2024, with an expected increase of 8.3% to $9.45 per share in fiscal 2026 [3] Stock Performance - EPAM's stock has decreased by 21% over the past 52 weeks, underperforming the Technology Select Sector SPDR Fund's 23.2% gains and the S&P 500 Index's 14.5% returns during the same period [4] - Following the release of strong Q2 results, EPAM's stock rose by 4.3%, driven by increased demand for AI-related services, with Q2 revenue growing 18% year-over-year to $1.4 billion [5] Analyst Ratings - The consensus opinion on EPAM stock is moderately bullish, with a "Moderate Buy" rating from 15 analysts; nine recommend "Strong Buy," one "Moderate Buy," and five suggest "Hold" [6] - The mean price target for EPAM is $206.69, indicating a potential upside of 32.1% from current price levels [6]

Core Insights - The article compares two IT Services stocks, Epam (EPAM) and Dynatrace (DT), to determine which is more attractive to value investors [1] Valuation Metrics - EPAM has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to DT, which has a Zacks Rank of 3 (Hold) [3] - EPAM's forward P/E ratio is 13.96, significantly lower than DT's forward P/E of 31.77, suggesting EPAM may be undervalued [5] - The PEG ratio for EPAM is 1.77, while DT's PEG ratio is 2.48, indicating that EPAM has a better balance between its price and expected earnings growth [5] - EPAM's P/B ratio is 2.39, compared to DT's P/B of 5.7, further supporting the notion that EPAM is more attractively valued [6] Conclusion - Overall, EPAM demonstrates stronger estimate revision activity and more favorable valuation metrics than DT, making it a more appealing option for value investors at this time [7]

Core Viewpoint - Wells Fargo has initiated coverage of EPAM Systems with an Overweight rating, highlighting the company's accelerating organic revenue growth and attractive valuation compared to peers [2] Summary by Category Company Performance - EPAM Systems is experiencing accelerating organic revenue growth, which is a key factor in Wells Fargo's positive outlook [2] Valuation - The stock has been assigned a target price of $185, indicating a favorable valuation relative to its competitors in the industry [2]

Core Viewpoint - EPAM (EPAM) shows potential for significant upside, with a mean price target of $206.69 indicating a 33.3% increase from the current price of $155.08 [1] Price Targets - The average of 13 short-term price targets ranges from a low of $150.00 to a high of $246.00, with a standard deviation of $27.67, suggesting variability in analyst estimates [2] - The lowest estimate indicates a potential decline of 3.3%, while the highest suggests a 58.6% upside [2] Analyst Sentiment - Analysts are optimistic about EPAM's earnings prospects, as indicated by a consensus on higher earnings estimates, which historically correlates with stock price movements [4][11] - Over the past 30 days, one earnings estimate has increased, leading to a 0.5% rise in the Zacks Consensus Estimate [12] Zacks Rank - EPAM holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [13] Price Movement Guidance - While the consensus price target may not be a reliable predictor of the exact price movement, it does provide a useful indication of the expected direction [14]

Core Points - EPAM Systems has authorized a new stock buyback program worth up to $1 billion [2] - The share repurchase program will last for 24 months but may be suspended or terminated [2]