Nvidia and Accenture partnership expands AI offerings, but Accenture's high valuation may deter investors

From Nasdaq: 2024-12-08 07:30:00

Nvidia partners with Accenture to expand AI offerings. Accenture has 30,000 employees trained in Nvidia’s AI technology, positioning it as a leader in providing AI expertise to clients. Despite a minor contribution to total bookings, generative AI is expected to drive growth for Accenture in the future. However, the stock’s high valuation may deter some investors from buying in.

Accenture’s fiscal 2024 performance saw conservative client spending, with generative AI accounting for only 5% of total bookings. Revenue growth was modest, with a 3% increase in Q4 and 1% for the year. The outlook for fiscal 2025 shows a slight improvement, but Accenture’s stock remains relatively expensive compared to other AI companies. The company’s focus on shareholder returns through dividends and stock buybacks may not be enough to justify its high valuation.

For investors looking for faster-growing AI companies at similar or cheaper valuations, Accenture may not be the best choice. The stock’s high price-to-earnings ratio and modest revenue growth could deter potential buyers. While the company’s focus on shareholder returns is commendable, it may not be enough to offset the stock’s expensive valuation.

Former Facebook director Randi Zuckerberg and Alphabet executive Suzanne Frey sit on The Motley Fool’s board of directors. The Motley Fool holds positions in Accenture, Alphabet, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. Investors should carefully consider their options before investing in Accenture or similar companies.



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