IT stocks hold ground in a weak market on Cognizant's strong outlook for 2025

Cognizant has projected 2025 revenue growth between 3.5 percent and 6 percent in constant currency

IT stocks held firm on February 6 in an otherwise weak market, with shares of TCS, Infosys, HCL Tech, and Wipro rising up to 1 percent. The rally followed Cognizant Technology Solutions’ impressive Q4 performance, where the Nasdaq-listed IT giant beat Street estimates on revenue and delivered a strong growth outlook for 2025.

Cognizant has projected 2025 revenue growth between 3.5 percent and 6 percent in constant currency, a notable improvement over its 1.9 percent growth in 2024. The firm ended 2024 on a high note, with Q4 revenue reaching $5.1 billion, marking a 6.7 percent year-on-year increase and hitting the higher end of its growth guidance.

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Net income for the quarter rose 2.1 percent YoY to $558 million, though it saw a 4.1 percent sequential decline. CEO Ravi Kumar S credited this momentum to the company’s strategic execution and strong deal pipeline, emphasising that Cognizant closed a record 29 large deals in 2024.

Regionally, Cognizant’s North America business led the way, expanding 8.4 percent YoY in Q4CY24. Europe saw 1.3 percent growth, while the rest of the world was up 3.9 percent.

Among industry verticals, health sciences surged 10.4 percent, financial services grew 2.8 percent, and communications, media, and technology rose slightly by 0.4 percent. The company’s products and resources segment stood out with 11.3 percent growth.

The company’s net income grew 2.1 per cent to $558 million, compared to $546 million in same quarter 2023. Net income was down 4.1 per cent sequentially.

Cognizant’s leadership remains optimistic about a recovery in discretionary IT spending, which could fuel a more balanced mix of short-term projects and large-scale deals in 2025.

"We are getting some discretionary spend back, and therefore the nature of growth in 2025 will be different—a mix of short-term work and long-term contracts," said CFO Jatin Dalal, reinforcing the company’s positive market outlook.

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