EPAM Systems, Inc. (EPAM): A Bull Case Theory 

We came across a bullish thesis on EPAM Systems, Inc. on Investing with Common Sense’s Substack. In this article, we will summarize the bulls’ thesis on EPAM. EPAM Systems, Inc.’s share was trading at $218.04 as of January 27th. EPAM’s trailing and forward P/E were 33.65 and 18.98, respectively according to Yahoo Finance.

EPAM Systems, Inc. provides digital platform engineering and software development services worldwide. EPAM Systems delivered a strong Q3 2025 that confirmed not just a recovery in demand but a clear acceleration, prompting a positive market reaction with the stock rising over 5%. Revenue reached $1.39 billion, up 19.4% year over year, supported by acquisitions but, more importantly, by organic growth of 7.1% in constant currency, accelerating from 5.3% in Q2 and marking the fourth consecutive quarter of organic improvement.

This momentum reflects a broad-based rebound in client spending and validates management’s view that demand is returning with greater strength and durability. Financial Services and Emerging Verticals led growth due to the continued impact of the First Derivative and NEORIS acquisitions, while core segments such as Software & Hi-Tech, Healthcare, and Consumer remained solid, albeit more moderate.

Margins contracted year over year, with non-GAAP gross margin at 31% and adjusted operating margin at 16%, but this was largely driven by temporary and non-recurring factors, including an unfavorable comparison to prior-year Polish R&D tax credits, higher bonus accruals tied to better performance, and the dilutive margin impact of recent acquisitions. Importantly, adjusted operating margin improved sequentially, underscoring a renewed focus on efficiency under new CEO Balazs Fejes. Adjusted EPS of $3.08 modestly declined year over year but exceeded expectations, reinforcing confidence in the underlying earnings power.

Management raised full-year 2025 guidance across revenue, organic growth, margins, and EPS, signaling conviction that Q3 was not a one-off. The earnings call further strengthened the investment case, highlighting EPAM’s success in scaling AI projects from pilots into production-grade programs, winning share from competitors that fail to execute, and generating record operating and free cash flow. This cash strength underpins a new $1 billion buyback program and supports optimism for accelerating growth into 2026, positioning EPAM for a meaningful rerating as demand normalizes.

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 expanding generative AI capabilities. CTSH’s stock price has appreciated by approximately 8.94% since our coverage. Investing with Common Sense shares a similar perspective but emphasizes accelerating demand recovery, margin normalization, and large-scale AI execution at EPAM.

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Disclosure: None.