Amdocs Limited (DOX): A Bull Case Theory 

We came across a bullish thesis on Amdocs Limited on Quality Value Investing’s Substack by David J. Waldron. In this article, we will summarize the bulls’ thesis on DOX. Amdocs Limited’s share was trading at $75.55 as of December 1st. DOX’s trailing and forward P/E were 14.96 and 10.03, respectively according to Yahoo Finance.

Amdocs Limited (DOX) is a dividend-paying mid-cap IT services company with a global footprint, providing software and services for communications, media, and entertainment providers. Its offerings span AI, cloud, 5G, and digital platforms, including CES24, Amdocs Subscription Marketplace, connectX, and eSIM Cloud, alongside consulting, managed services, data intelligence, and professional services.

These solutions support service providers in transforming operations and delivering enhanced digital experiences, leveraging nearly 1,000 client relationships worldwide. Despite the competitive and replicable nature of its services, Amdocs benefits from a narrow economic moat through sticky customer relationships, fostering recurring revenue and long-term engagement.

Financially, the company has delivered mid-single-digit trailing revenue growth over the past five years, underperforming the S&P 500, with recent revenue declines of -6.8% amid broader market gains. Gross margins remain robust at 37.2%, translating to positive double-digit net profit margins, though below the S&P 500’s benchmark.

Management has maintained a disciplined approach to capital allocation, consistently repurchasing shares, including a $1 billion buyback plan in May 2025, boosting ROE, while ROIC exceeds its cost of capital. Owners’ earnings, incorporating EPS and dividend growth, have grown at an impressive double-digit rate, rising to 26.2% when factoring free cash flow, underscoring strong shareholder returns.

Amdocs’ cloud portfolio, coupled with high-margin services and sticky customer relationships, positions it as a resilient mid-cap technology services company with a bullish value proposition. Its consistent dividend policy, strategic share repurchases and growing owners’ earnings highlight both financial stability and shareholder-friendly management, making DOX an attractive investment in the IT services sector with potential for continued growth and value creation.

Previously we covered a bullish thesis on Cognizant Technology Solutions Corporation (CTSH) by Magnus Ofstad in May 2025, which highlighted the company’s AI-led productivity strategy and strategic partnerships driving growth. The company’s stock price has depreciated approximately by 0.34% since our coverage due to broader market headwinds. The thesis still stands as CTSH’s AI transformation gains traction. David J. Waldron shares a similar bullish view but emphasizes Amdocs’ mid-cap IT services model, sticky customer relationships, and disciplined capital allocation.

Amdocs Limited is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held DOX at the end of the second quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of DOX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DOX and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.