Capgemini shares fall despite revenue beat and aggressive AI pivot
Capgemini shares fall despite revenue beat and aggressive AI pivot
Capgemini shares fell despite surpassing revenue targets, as investors focused on the financial strain of its AI transformation. The company's stock neared a 52-week low due to concerns over increased net debt and a €700 million restructuring plan. While AI bookings grew, the market remains cautious about the high costs and execution risks involved.
Despite clearing its upgraded full-year targets, the French IT consultancy’s stock was near its 52-week-low during early trade as the market scrutinised a surge in net debt and a massive €700 million restructuring bill
Capgemini SE shares faced downward pressure on Friday morning as investors weighed a 2025 revenue beat against the heavy financial toll of the company’s "AI-first" transformation. Despite clearing its upgraded full-year targets, the French IT consultancy’s stock, listed on the Paris stock exchange, was near its 52-week-low during early trade as the market scrutinised a surge in net debt and a massive €700 million restructuring bill.
Growth fuelled by acquisitions
For the fiscal year ending December 31, 2025, Capgemini reported revenues of €22.47 billion, a 3.4% increase at constant exchange rates. This figure sat comfortably above the company’s October guidance of 2% to 2.5%. Much of this momentum was concentrated in the fourth quarter, where revenue spiked by 10.6%. However, analysts noted that this "surge" was heavily inorganic, powered by the consolidation of Indian BPM firm WNS and Cloud4C, rather than pure organic demand.
The "Agentic AI" transition
The report highlighted a shift in client behaviour. CEO Aiman Ezzat said that "Generative and Agentic AI" now represent over 10% of total group bookings, up from 5% mid-year. Ezzat stressed that the industry has moved past the "pilot project" phase into large-scale enterprise transformation. While this confirms Capgemini’s relevance in the AI race, the market remains wary of the high cost required to capture this specialised market share.
Costly workforce overhaul
To pivot toward these AI-led services, Capgemini announced a €700 million workforce adaptation plan to be executed through 2027. This restructuring aims to retrain thousands of employees while moving away from legacy IT maintenance roles. While strategically sound, the immediate impact is a projected dip in 2026 organic free cash flow to between €1.8 billion and €1.9 billion, a forecast that seems to have cooled investor enthusiasm.
Debt concerns and 2026 guidance
The acquisition-led strategy has also fundamentally altered the company’s balance sheet. Net debt jumped to €5.3 billion—up from €2.1 billion a year prior—primarily due to the €3.8 billion spent on the WNS deal. For 2026, the Group is targeting revenue growth of 6.5% to 8.5%, but with nearly 5 percentage points of that growth coming from existing acquisitions, organic expansion remains modest.
The board’s proposal of a €3.40 per share dividend may be seen as a confidence in long-term liquidity, but it did little to stem the early morning sell-off. As Capgemini trades near its 52-week lows, the narrative has shifted from "AI potential" to "execution risk." Analysts opine that while the company has successfully bought its way into the AI leadership circle, now, it must prove it can integrate those assets and retrain its workforce without further eroding its margins.