Accenture (ACN) is likely to face continued pressure from slower discretionary technology spending as enterprise artificial intelligence investments crowd out traditional IT services budgets, Morgan Stanley said in a note Monday.
The investment firm said its Q1 CIO Survey points to just about 2% year-over-year growth in IT services spending in 2026, while overall IT budget growth remains largely unchanged amid increasing AI prioritization.
Fiscal Q3 bookings could fall short of expectations, Morgan Stanley said, citing tougher comparisons and a "diminishing" benefit from managed-services contracts. Investor concerns have centered on weaker bookings, the risk of future estimate cuts and fears that AI-driven productivity gains could eventually weigh on demand for services firms, according to the note.
The firm said Accenture remains well-positioned due to its scale, enterprise relationships and exposure to large transformation projects, but expressed increased caution over its acquisition strategy as AI-related assets become more expensive and investors question the revenue potential of increasingly "product-focused" deals.
Morgan Stanley downgraded Accenture to equal-weight from overweight, and cut its price target to $177 from $240.
Price: $169.98, Change: $-0.30, Percent Change: -0.18%