The case for & against
Bull & Bear analysis
Bullish
Kyndryl Holdings, Inc. (NYSE: KD) is a leading global provider of technology services focused on mission-critical systems management, consulting, IT modernization, and AI integration. The company operates in the IT services sector, leveraging strategic partnerships with hyperscalers like Amazon and IBM to enhance its service offerings and support enterprises as they undergo digital transformations. Kyndryl is positioned to capitalize on the rising demand for comprehensive technology solutions, particularly amid evolving regulatory environments and advancements in artificial intelligence.
Bull says
- ↑$1.9B hyperscaler revenue up 59% YoY fosters cloud growth
- ↑$1B+ adjusted FCF target underpinned by high earnings yield
- ↑Consulting segment signings rose 50% in constant currency
- ↑Adjusted EBITDA margins expanded 100bps YoY, boosting profitability
- ↑$304M share buybacks and $2.6B cash strengthen the balance sheet
- ↑Strategic partnerships with Amazon and IBM enhance service offerings
Bear says
- ↓Profitability remains weak with ~$100M quarterly revenue shortfall
- ↓Extended sales cycles create backlog, risking timely revenue delivery
- ↓Analysts cut EPS estimates and maintain a $16.67 price target
- ↓IBM partnership spend halved from $4B to ~$2B, pressuring top line
- ↓Negative price momentum and small market size heighten volatility
- ↓Economic uncertainty may constrain client IT budgets and deals
Investment themes with KD
IT Consulting & Services↑ +0.97%
IBM · ACN · CTSH
Bespoke 'AI Doom' Basket↑ +0.90%
MA · V · COF
Earnings Call · Q4 2026 · Mgmt. Guidance
Updated 05-10-2026neutral
Transcript signals
Bull points
- Through our alliances, we generated $1.9 billion in hyperscaler-related revenue in fiscal 2026, up 59% versus last year, and exceeded the 50% growth in hyperscaler-related revenue that we were expecting at the beginning of the year.
- We exited this fiscal year at 0.5 times, which is an improvement from 0.7 times at the end of our fiscal 2024.
- for us, the key is to make sure we're moving into new customers, to make sure we have new content in all of our deals so that that bigger pipeline yields in the timeframes that we need.
Bear points
- we generated 15.1 billion of revenue, flat from the prior year on a reported basis, and down 3% in constant currency.
- As we have described before, at the time of spinoff, approximately 40% of our revenue from our inherited commercial agreements were in low to no margin position. Our annualized run rate or spend with IBM was nearly $4 billion. Over the past four years, we have addressed most of the focus accounts, leading to improved profitability gains. In fact, by the end of this fiscal year, our annualized run rate or spend with IBM was less than $2 billion, half of where it was when we were spun off.
- In fiscal 2027, we are expecting similar headwinds to continue.
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