DXC Technology Co. Navigates a Revenue Dip While Betting on AI‑Led Growth
DXC Technology Co. (NYSE: DXC) reported its third‑quarter fiscal 2026 results on 29 January, delivering a profit that surpassed expectations even as revenue fell short of forecasts. The company posted net income of $0.14 per share—a 12% rise versus the same quarter a year earlier—despite a 4.3 % decline in top line activity. Revenue was $3.18 billion, slightly above analysts’ average estimate of $3.17 billion, yet it still lagged 2.5 % below the previous quarter’s $3.23 billion.
Earnings Beat Amid a Slowing Revenue Base
The earnings surprise stemmed from a combination of disciplined cost management and a higher margin on digital transformation services. Management highlighted that operating expenses were trimmed by 1.6 % YoY while investment in high‑margin AI consulting remained steady. The company’s price‑to‑earnings ratio of 7.14 continues to reflect its valuation as a defensive play in the IT services sector, even as the market has recently leaned toward high‑growth technology names.
AI‑Driven Revenue Target
DXC’s strategic focus on artificial intelligence has crystallized into a concrete revenue goal. The firm has committed to reaching 10 % of its run‑rate revenue from AI‑fast‑track initiatives by Q2 2029, a target that underscores its dual‑track strategy of pursuing both traditional managed services and cutting‑edge AI solutions. The company’s AI portfolio currently spans analytics, cloud workloads, and security services, positioning it to capture the growing demand for automation and data‑driven decision making.
Regional Leadership Change
In a bid to bolster its presence in high‑growth markets, DXC announced on 1 February that Rob Le Busque will take over as Asia Pacific & Japan Leader. Le Busque brings a decade of experience in digital transformation across the region, and his appointment signals the company’s intent to deepen its foothold in Asia‑Pacific, where demand for cloud and AI services is accelerating.
Q4 Outlook and Guidance
The firm projected Q4 revenue between $3.16 billion and $3.19 billion, a range that indicates modest growth relative to the third quarter. Management emphasized that while revenue growth remains under pressure, the company expects to maintain a healthy gross margin through continued investment in AI and cloud capabilities. The guidance aligns with the broader industry trend of slow yet steady expansion as firms adjust to post‑pandemic demand levels.
Market Reactions
The market reaction reflected a mixed view. Shares closed at $14.43 on 29 January, down from a 52‑week high of $23.75 but above the 52‑week low of $11.82. Analyst sentiment remains cautiously optimistic, citing the company’s strong earnings, disciplined cost base, and the tangible AI revenue target as key support factors. Nonetheless, the revenue miss and the ongoing competitive pressure from other IT services providers continue to temper investor enthusiasm.
Key Takeaways
- Profitability Upside – EPS beat expectations thanks to cost discipline and high‑margin AI services.
- Revenue Decline – Top line slipped 4.3 % YoY, but guidance suggests a gradual rebound.
- AI as Growth Lever – 10 % AI revenue target by Q2 2029 underscores DXC’s strategic pivot.
- Regional Strengthening – Appointment of Rob Le Busque aims to accelerate growth in Asia‑Pacific.
- Investor Sentiment – Market remains on the edge, valuing earnings strength while wary of revenue softness.
