As Cognizant Links Up with Google on AI Deal, Here’s How to Play CTSH Stock Now

Artificial intelligence (AI) has become the next big proving ground for enterprise technology companies, and Cognizant Technology Solutions Corporation (CTSH) is making sure it stays ahead of the curve. 

The company has steadily expanded its strategic partnerships while embedding generative AI more deeply into its operations, sharpening its cloud capabilities, and helping businesses accelerate digital transformation through industry-focused AI solutions and productivity gains.

Investors welcomed the latest step in that strategy on Tuesday, July 7, sending Cognizant’s shares up 6.2% after the company expanded its partnership with Alphabet's (GOOGL) Google Cloud. The broader collaboration brings Gemini Enterprise to more clients while also strengthening Cognizant's own internal use of the technology.

The company plans to roll out Gemini Enterprise and Google Workspace to 100K AI associates this year, then expand access to 200K over time, while certifying at least 10K professionals. 

Management also revealed that internal adoption has boosted software development speed by up to 30%, while AI agents now automate 60% to 70% of manual work across selected tasks. One customer deployed the AI agents within three months and completed more than 500 AI model optimizations during the first year.

The latest partnership gives Cognizant another powerful AI catalyst, but the bigger question for investors now is whether that momentum makes CTSH stock worth buying. 

About Cognizant Stock

Headquartered in Teaneck, New Jersey, Cognizant ranks among the world's leading professional services companies. With a market cap of $20.8 billion, the company helps businesses accelerate digital transformation through consulting, AI, cloud, engineering, and technology services.

However, Cognizant's shares have struggled despite the company's long-term growth initiatives. The stock fell 47.4% during the past 52 weeks, while year-to-date (YTD), shares declined 48.9%. 

The selling pressure also remained intense over shorter periods as the stock dropped 30.4% during the past three months and another 20% during the last month. Still, the tide has started to turn as CTSH stock climbed 9.6% during the past five trading sessions.

On the valuation front, CTSH stock is currently trading at 7.26 times forward adjusted earnings and 0.93 times sales. Both valuation multiples remain below the broader industry averages and their own five-year average multiples, leaving the stock trading at a discount.

Income investors also have something to smile about. Cognizant has increased its dividend for six straight years. The company pays an annual dividend of $1.32 per share, yielding 3.19%. Moreover, the company distributed its latest quarterly dividend of $0.33 per share on May 27 to shareholders of record on May 18.

A Closer Look at Cognizant’s Q1 Earnings

Cognizant kicked off FY2026 on a solid note when it reported first-quarter results on April 29. Revenue increased 5.8% year-over-year (YOY) to $5.41 billion, matching Wall Street expectations. Adjusted EPS rose 13.8% from the prior year to $1.40, comfortably beating the Street estimate of $1.33.

The company's profitability also moved in the right direction. Adjusted income from operations increased 6.6% YOY to $843 million, while adjusted net income climbed 9% to $666 million. Free cash flow was the lone soft spot, declining 49.6% from the year-ago quarter to $198 million.

Bookings told an even stronger story. First quarter bookings surged 21% from the prior year, making it one of Cognizant's strongest booking quarters in recent history. The company even secured seven large deals with total contract values of at least $100 million each. 

One of those contracts qualified as a mega deal with a total contract value of at least $500 million. In addition, management noted that the large deal total contract value jumped more than 70% from the previous year.

Company executives believe Cognizant's AI builder strategy, deep industry expertise, and scaled partnership ecosystem give it a strong edge in closing the "AI Velocity Gap" by helping clients turn significant AI investments into measurable business outcomes.

Looking ahead, the firm expects second quarter revenue to land between $5.45 billion and $5.52 billion, representing growth of 3.8% to 5.3%, or 3.2% to 4.7% in constant currency.

For the full year 2026, Cognizant expects revenue between $22.11 billion and $22.64 billion, reflecting growth of 4.8% to 7.3%, or 4.0% to 6.5% in constant currency. The company also expects adjusted diluted EPS between $5.63 and $5.77, representing annual growth of 7% to 9%.

Wall Street remains broadly aligned with that outlook. Analysts expect Cognizant to deliver Q2 FY2026 EPS of $1.38, up 5.34% YOY. They also forecast full-year FY2026 EPS of $5.70, marking 8% growth from the previous year. Looking further ahead, analysts expect FY2027 EPS to reach $6.21, representing another 9% increase.

What Do Analysts Expect for Cognizant Stock?

Wall Street continues to give Cognizant the benefit of the doubt. Currently, CTSH stock carries an overall rating of “Moderate Buy.” Among 28 analysts covering the stock, 10 recommend “Strong Buy,” one assigns “Moderate Buy,” and 17 maintain “Hold” ratings.

To that end, the average price target of $66.08 represents potential upside of 55.7%. Meanwhile, the Street-High target of $88 suggests a gain of 107.4% from current levels.