MarketBeatยท2025-07-01 20:07Core Viewpoint - The market has reacted differently to IBM and Accenture, two leaders in Gen-AI consulting, with IBM's stock soaring while Accenture's remains stagnant despite both companies having multi-billion-dollar Gen-AI businesses [1][2]. Group 1: Company Performance - IBM's Gen-AI business grew to $6 billion from inception through March 2023, achieving an average quarterly booking growth of approximately $850 million over seven quarters [3]. - Accenture's Gen-AI business stands at $4.1 billion as of May 31, 2023, with an average quarterly growth of nearly $1.37 billion, and a last quarter booking growth of $1.5 billion, which is 50% higher than IBM's "more than $1 billion" figure [4][3]. Group 2: Market Reactions and Analyst Predictions - Accenture's stock has not captured gains like IBM, leading analysts to predict notable upside potential for Accenture while forecasting downside for IBM [2][10]. - The consensus price target for Accenture is $370, implying nearly 24% upside, while IBM's target suggests over 13% downside from its June 30 closing price [10]. Group 3: Challenges Facing Accenture - Accenture's overall bookings declined by 6% last quarter, overshadowing its Gen-AI success, and the company faces a 2% headwind to overall revenue growth due to a slowdown in its federal government business [5][7]. - The company is experiencing leadership losses and a long-term internal restructuring, which complicates its ability to capitalize on its Gen-AI achievements [8]. Group 4: Long-term Outlook - Despite current challenges, Gen-AI is crucial for Accenture's long-term success, positioning the company favorably in the AI consulting space [9]. - Accenture's forward P/E ratio of approximately 22x is lower than IBM's 26x, reflecting the headwinds Accenture is facing but also indicating potential for future growth as these issues subside [12].