As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at it services & consulting stocks, starting with IBM (NYSE: IBM).

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 Q2. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 0.6% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.6% since the latest earnings results.

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 $16.98 billion, up 7.7% year on year. This print exceeded analysts’ expectations by 2.4%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ operating income estimates but revenue guidance for next quarter missing analysts’ expectations.

"We once again exceeded expectations for revenue, profit and free cash flow in the quarter. IBM remains highly differentiated in the market because of our deep innovation and domain expertise, both crucial in helping clients deploy and scale AI. Our generative AI book of business continues to accelerate and now stands at more than $7.5 billion," said Arvind Krishna, IBM chairman, president and chief executive officer.

Unsurprisingly, the stock is down 14% since reporting and currently trades at $242.57.

Read our full report on IBM here, it’s free.

Best Q2: 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 $1.35 billion, up 18% year on year, outperforming analysts’ expectations by 1.5%. The business had a strong quarter with a solid beat of analysts’ EPS guidance for next quarter estimates and a solid beat of analysts’ constant currency revenue estimates.

The market seems content with the results as the stock is up 4.3% since reporting. It currently trades at $158.

Is now the time to buy EPAM? Access our full analysis of the earnings results here, it’s free.

Slowest Q2: ASGN (NYSE: ASGN)

Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE: ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.

ASGN reported revenues of $1.02 billion, down 1.4% year on year, exceeding analysts’ expectations by 2.4%. Still, it was a softer quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates and a significant miss of analysts’ EPS estimates.

As expected, the stock is down 1.2% since the results and currently trades at $49.44.

Read our full analysis of ASGN’s results here.

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 $101.1 million, up 21.7% year on year. This number beat analysts’ expectations by 0.5%. It was a strong quarter as it also logged full-year revenue guidance topping analysts’ expectations and a decent beat of analysts’ EPS estimates.

Grid Dynamics pulled off the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is down 17.2% since reporting and currently trades at $7.86.

Read our full, actionable report on Grid Dynamics here, it’s free.

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 2.4% year on year. This result surpassed analysts’ expectations by 2.4%. It was a satisfactory quarter as it also produced an impressive beat of analysts’ EPS estimates.

DXC achieved the biggest analyst estimates beat and highest full-year guidance raise, but had the slowest revenue growth among its peers. The stock is down 3.6% since reporting and currently trades at $13.14.

Read our full, actionable report on DXC here, it’s free.

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.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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