DXC Technology (NYSE:DXC) shares have fallen 16.41% so far this year as of July 29, 2026. The company’s most recent earnings, reported May 7 for its fiscal fourth quarter, help explain the drop: revenue fell 1.2% year over year to $3.13 billion, down 6.6% on an organic basis, and DXC posted a GAAP loss of $0.84 a share for the quarter. Even so, hedge fund sentiment has stayed remarkably calm.

Why the Core Business Keeps Shrinking

The weak headline number undersells how broad the slowdown is. Bookings fell 13.5% year over year in the quarter to $3.3 billion, and Global Infrastructure Services, DXC Technology Company (NYSE:DXC)’s largest segment, saw bookings drop 18.9% and organic revenue fall 10.6%. For the full fiscal year, DXC booked less new business than it billed, a 0.98 book-to-bill ratio, total revenue fell 4.8% organically to $12.64 billion, and GAAP diluted earnings per share collapsed to just $0.10 for the year, down more than 95%, even as adjusted EBIT margin held up better at 7.7%. CEO Raul Fernandez was candid about it, saying DXC delivered strong free cash flow and margin performance “while our top line performance fell short.” Guidance for the new fiscal year doesn’t point to a turnaround either: DXC expects organic revenue to keep declining, by 3% to 5% for all of fiscal 2027 and by 6.5% to 7.5% in the first quarter alone. That’s the backdrop for everything DXC has announced since May: the Anthropic alliance, the expanded LabX unit, and a reshuffled leadership team.

This makes you wonder: can DXC’s AI pivot actually turn around a business that’s still guiding for another year of decline, or is it a story the market won’t believe until the revenue numbers themselves turn around?

The Bull Case

One segment is already proving the turnaround case: Insurance Software & Services. Revenue there rose 7.3% in the fiscal fourth quarter and 5.4% for the full year, and bookings jumped 20.3% in the quarter, the only segment growing on every measure. DXC Technology Company (NYSE:DXC) backed that up with a real win, completing the migration of more than 400,000 Wilton Re policies onto a modern cloud platform in July, capping a 20-year partnership and reinforcing DXC’s role as a trusted partner to 21 of the top 25 insurers worldwide. Free cash flow held up too, at $713 million for the full fiscal year, up 3.8%, funding $250 million in share buybacks even in a down year.

On the AI side, the Anthropic alliance, announced June 11, makes DXC one of the few Global Premier partners in the Claude Partner Network. Its new AI orchestration platform, DXC OASIS, already runs on Claude for more than 95% of its code and has cut software delivery time by roughly 10x, with more than 50 customers live since its April launch. DXC’s incoming Global Infrastructure Services president, Dan Gray, called the platform’s approach a way of “defining a new category of managed services” in a Bloomberg Live interview. DXC’s industry reach backs the pitch too: seven of the world’s top ten energy companies already work with DXC, and the firm blends IoT, edge computing and machine learning for real-time decisions across oil, gas and grid operations. DXC Engineering, built on the Luxoft business DXC acquired in 2019, already powers software in more than 50 million vehicles and counts 17 of the world’s top 20 banks as clients. DXC also won a major legal fight in June, when the U.S. Supreme Court declined to hear Tata Consultancy Services’ appeal, leaving intact a $168 million award DXC won after suing Tata for stealing trade secrets tied to life-insurance software.

The Bear Case

The segment that matters most isn’t cooperating. Global Infrastructure Services made up roughly half of DXC Technology Company (NYSE:DXC)’s revenue in fiscal 2026, and it’s the segment shrinking fastest: bookings fell 18.9% in the fourth quarter and 13.3% for the full year, with organic revenue down 10.6% and 7.2%. Consulting and Engineering Services isn’t much better, with organic revenue down nearly 4% both in the quarter and for the full year. GAAP profitability nearly disappeared: DXC posted a net loss per share in the fourth quarter and diluted earnings per share of just $0.10 for the full year. DXC’s own guidance for fiscal 2027 calls for continued organic revenue decline, not stabilization, meaning the firm itself isn’t yet promising the top line will turn around. The leadership reshuffle adds to the uncertainty too: installing a new president to unify commercial execution just months after this earnings report implicitly acknowledges the old structure wasn’t fixing the decline fast enough, and Global Infrastructure Services, the weakest segment, is exactly the business that longtime president Chris Drumgoole just left behind.

Insider Monkey’s Hedge Fund Data

Insider Monkey’s hedge fund database shows a small but growing group of believers. 35 hedge funds held DXC Technology (NYSE:DXC) at the end of Q1 2026, up from 28 the quarter before, and the dollar value they held rose from about $311 million to $326 million.

DXC’s closest comparables by market cap are Unisys (UIS), NCR Voyix (VYX), and Concentrix (CNXC). Unisys was held by just 12 hedge funds, NCR Voyix by 29, and Concentrix (CNXC) by 25. Overall, DXC is more liked by hedge funds than all three of these peers.

Conclusion 

DXC Technology Company (NYSE:DXC)’s AI pivot is real, and the Insurance Software & Services segment is proof the strategy can work somewhere. However, the company’s largest segment, Global Infrastructure Services, is still shrinking by double digits on bookings, GAAP profitability nearly vanished this past quarter, and DXC’s own guidance for fiscal 2027 points to more organic revenue decline, not a turnaround.

Hedge funds were overall very bullish in comparison to similar stocks heading into this news. Now, the real test for DXC isn’t whether it can announce more AI partnerships, it’s whether the next earnings report shows Global Infrastructure Services and Consulting and Engineering Services actually stabilizing.

While we acknowledge the risk and potential of DXC 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 DXC and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure. None.