Let’s dig into the relative performance of Amdocs (NASDAQ:DOX) and its peers as we unravel the now-completed Q3 it services & other tech earnings season.
The IT and tech services subsector is poised for growth as businesses accelerate cloud adoption, AI-driven network automation, and edge computing deployments. While these seem like big, nebulous trends, they require very real products like switches and firewalls as well as implementation services. On the other hand, challenges on the horizon include intensifying competition from cloud-native networking providers, regulatory scrutiny over data privacy and cybersecurity, and potential supply chain constraints for networking hardware. While AI and automation will enhance network efficiency and security, they also introduce risks related to algorithmic bias, compliance complexity, and increased energy consumption.
The 20 it services & other tech stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.7% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Amdocs (NASDAQ:DOX)
Powering the digital experiences of approximately 400 communications companies worldwide, Amdocs (NASDAQ:DOX) provides software and services that help telecommunications and media companies manage customer relationships, monetize services, and automate network operations.
Amdocs reported revenues of $1.15 billion, down 9% year on year. This print exceeded analysts’ expectations by 0.6%. Despite the top-line beat, it was still a mixed quarter for the company with a narrow beat of analysts’ backlog estimates but a significant miss of analysts’ EPS guidance for next quarter estimates.
"Fiscal 2025 was another important year as we delivered financial results consistent with our expectations while serving our global telecommunications customers with cutting-edge cloud, digital and AI-driven solutions designed to meet their strategic imperatives. Cloud-related activities delivered double-digit growth, reaching over 30% of total revenue, and we achieved significantly better profitability while maintaining our commitment to R&D. The year finished with very strong sales momentum. We secured Google Cloud migration awards at TELUS in Canada and Lumen Technologies in US and signed a digital transformation and IT operations agreement with Fidium, a new fiber customer in the US. Our international footprint expanded with modernization awards at British Telecom, or BT-EE in the UK, Altice SFR in France, Telia in Finland, PLDT in Philippines and Claro Brazil. Additionally, Telefónica Germany chose Amdocs to implement new GenAI use cases using the amAIz Sales Agent. This latest win extends our momentum following recent GenAI-related deals with Altice Optimum, e& UAE, and Consumer Cellular, and further demonstrates Amdocs' pivotal role in accelerating generative AI adoption in the telecom industry," said Shuky Sheffer, president and chief executive officer of Amdocs Management Limited.
Unsurprisingly, the stock is down 5.5% since reporting and currently trades at $79.38.
Read our full report on Amdocs here, it’s free for active Edge members.
Best Q3: Applied Digital (NASDAQ:APLD)
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ:APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Applied Digital reported revenues of $64.22 million, up 84.3% year on year, outperforming analysts’ expectations by 17.6%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 10.7% since reporting. It currently trades at $26.27.
Is now the time to buy Applied Digital? 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 21.2% since the results and currently trades at $9.21.
Read our full analysis of Grid Dynamics’s results here.
Diebold Nixdorf (NYSE:DBD)
With roots dating back to 1859 and a presence in over 100 countries, Diebold Nixdorf (NYSE:DBD) provides automated self-service technology, software, and services that help banks and retailers digitize their customer transactions.
Diebold Nixdorf reported revenues of $945.2 million, up 2% year on year. This result surpassed analysts’ expectations by 0.8%. It was a very strong quarter as it also recorded a beat of analysts’ EPS estimates and a narrow beat of analysts’ revenue estimates.
The stock is up 21.4% since reporting and currently trades at $68.29.
Read our full, actionable report on Diebold Nixdorf here, it’s free for active Edge members.
Hewlett Packard Enterprise (NYSE:HPE)
Born from the 2015 split of the iconic Silicon Valley pioneer Hewlett-Packard, Hewlett Packard Enterprise (NYSE:HPE) provides edge-to-cloud technology solutions that help businesses capture, analyze, and act upon their data across hybrid IT environments.
Hewlett Packard Enterprise reported revenues of $9.68 billion, up 14.4% year on year. This print came in 2% below analysts' expectations. Taking a step back, it was a mixed quarter as it also produced a solid beat of analysts’ ARR estimates but revenue guidance for next quarter missing analysts’ expectations significantly.
The stock is up 7.1% since reporting and currently trades at $24.69.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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