Cognizant Technology Solutions Corporation (CTSH): A Bull Case Theory

We came across a bullish thesis on Cognizant Technology Solutions Corporation (CTSH) on Substack by Magnus Ofstad. In this article, we will summarize the bulls’ thesis on CTSH. Cognizant Technology Solutions Corporation (CTSH)’s share was trading at $77.70 as of May 2nd. CTSH’s trailing and forward P/E were 16.36 and 15.38 respectively according to Yahoo Finance.

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Cognizant (CTSH) delivered a strong Q1 2025 performance with revenue reaching $5.12 billion, a 7.5% year-over-year increase—the company’s highest growth rate in several years and a sharp acceleration from the flat growth seen in early 2024. This marked turnaround reflects the early success of CTSH’s AI-led productivity strategy, which is central to its transformation. By embedding artificial intelligence across its operations and client services, CTSH is enhancing efficiency, automating processes like code generation, and addressing technical debt—allowing it to deliver more value with fewer resources. The company’s investments in AI are translating into real wins, including new and expanded contracts driven by generative AI, enterprise AI agents, and multi-agent orchestration systems. At the core of this shift is the Neuro® AI platform, which spans the entire AI development lifecycle—from prototyping to scalable deployment—empowering clients to build tailored AI solutions efficiently. CTSH has deepened its AI capabilities through key partnerships with NVIDIA, Microsoft, and Google, developing industry-specific large language models and AI agents. These technologies underpin use cases such as smart manufacturing digital twins, AI-driven software engineering, and intelligent automation. A robust patent portfolio, including innovations in LLM uncertainty estimation, reinforces CTSH’s position as a trusted AI provider. While this strategic pivot is clearly gaining traction, management remains cautious due to uncertainties around government contracts and tariffs. These risks, along with a conservative tone from leadership, justify maintaining a $100 per share fair value estimate. Nonetheless, CTSH’s clear focus on AI-led growth and its execution to date make it a compelling long-term story with improving fundamentals.

Cognizant Technology Solutions Corporation (CTSH) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held CTSH at the end of the fourth quarter which was 39 in the previous quarter. While we acknowledge the risk and potential of CTSH 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 timeframe. If you are looking for an AI stock that is more promising than CTSH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.