Is EPAM a good stock to buy? We came across a bullish thesis on EPAM Systems, Inc. on The Mispricing Desk’s Substack. In this article, we will summarize the bulls’ thesis on EPAM. EPAM Systems, Inc.’s share was trading at $96.72 as of June 8th. EPAM’s trailing and forward P/E were 14.02 and 7.44 respectively according to Yahoo Finance.
EPAM Systems, Inc. provides digital platform engineering and software development services worldwide. EPAM is being increasingly mispriced as the market extrapolates generative AI disruption into a near-term collapse in outsourced engineering demand, despite current financial performance suggesting a far more resilient operating backdrop.
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The company reported Q1 revenue of $1.400 billion, growing 7.6% year over year, with non-GAAP diluted EPS of $2.86 and a solid 14.3% non-GAAP operating margin, indicating that profitability remains intact even through a period of demand uncertainty.
While full-year revenue growth guidance was modestly revised to 4.0%–6.5% and EPS guidance to $12.98–$13.28, the underlying business continues to expand, supported by a strong balance sheet with approximately $1.043 billion in cash and only $165 million in debt, leaving a substantial net cash position. At the same time, EPAM has shifted decisively into capital return mode, repurchasing $324 million of shares in the quarter, including a $300 million accelerated share repurchase, and actively reducing its share count from 54.274 million to 52.757 million, reinforcing a shrinking float dynamic.
Despite a temporary negative swing in operating cash flow, the company’s capital allocation and profitability profile remain consistent with a durable services franchise rather than a structurally impaired one. The market, however, is valuing EPAM at roughly a low single-digit multiple of forward earnings, implying excessive pessimism around long-term demand destruction from AI.
This creates a disconnect between price and fundamentals, particularly given EPAM’s continued growth, stable margins, and disciplined buyback execution. Catalysts for re-rating include sustained execution in upcoming quarters, continued aggressive share repurchases, and evidence that AI-related services become a tailwind rather than a headwind. If these conditions hold, EPAM has the potential to re-rate materially as earnings stability and shrinking share count begin to dominate the prevailing disruption narrative.
Previously, we covered a bullish thesis on Cognizant Technology Solutions Corporation by Magnus Ofstad in May 2025, which highlighted the company’s AI-led productivity transformation, accelerating growth, and expanding enterprise AI capabilities through strategic partnerships and the Neuro® AI platform. CTSH’s stock price has depreciated by approximately 31.80% since our coverage. The Mispricing Desk shares a similar view but emphasizes on EPAM Systems, Inc.’s valuation disconnect, resilient margins, and aggressive share repurchases amid AI disruption concerns.
EPAM Systems, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held EPAM at the end of the first quarter which was 44 in the previous quarter. While we acknowledge the risk and potential of EPAM 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 EPAM and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
