50% COLLAPSE OF ACCENTURE IN 6 MONTHS IS AN OMINOUS SIGN FOR AI - IT’S FAR WORSE THAN BAD EARNINGS

[00:00:00]So, Accenture was supposed to be one of the biggest winners in the artificial intelligence revolution. Instead, investors over about the past six months have cut the value of the company, the shares about in half. Yesterday, Accenture reported their earnings and their stock collapsed almost 20%.

[00:00:26]So from December 19th till today, June 19th, the stock has tanked about 53%.

[00:00:36]The stock is now back to its 2017 levels. So what happened? Well, the company lowered their guidance first off. They said that their bookings uh their clients booking had weakened and the management talked about slower client decisions.

[00:00:54]Even Wall Street came out and framed an article, released a story yesterday around what they called the cloudy AI future for Accenture.

[00:01:05]This is not a small operation, folks. Uh they employ nearly 800,000 people. They operate in more than 100 countries. They advise some of the largest corporations in the world. And most importantly though, they sit directly in the middle of a cor corporate um technology spending. So when a company wants to move to the cloud, Accenture gets involved. When a company wants to deploy AI, they get involved. When a company wants digital transformation, Accenture is supposed to, right? They get involved. That's their role. So here are some of what I think are relevant questions that everyone should be asking now about this huge company. If AI spending is really exploding, why has Accenture lost half of its value in the last in the last 6 months? If corporations are racing to adopt AI, why are their bookings falling? If the opportunity is so obvious, then why are their client decisions slowing as their management said yesterday? And if AI is creating enormous value as we're being force-fed every day, why is one of the companies supposedly helping corporations to implement artificial intelligence struggling to convince their investors to stay on board? So, the problem with most AI coverage is everyone focuses on Nvidia. They focus on the data centers. They focus on spending. And in all this AI fever, very few are honing in on whether the spending is actually producing returns.

[00:02:48]By the way, do me a favor and please subscribe to my channel. If you're not subscribed, if you want to get on board for the risk map, I'll leave a link in the description below. So, I think this story is far bigger than Accenture. Uh but keep in mind, they don't sell uh chips. uh they sell implementation, they sell transformation, adoption, and most importantly execution. In other words, they sit much closer to the actual economic payoff rather than uh let's say a chip manufacturer or a or a semiconductor manufacturer does. And of course, the financial media are going to tell you this was just about earnings, just about Accentur's guidance, maybe about the Middle East. So, I'm going to tell you all the reasons why these impacts are temporary, but from my perspective way in here, I don't think that's why investors have cut the value of this company in half basically in six months. I think investors are asking a much larger question which strikes at the heart of the entire AI frenzy.

[00:03:55]If AI is creating so much value, why is one of the companies that's helping corporations implement this AI struggling so badly? And I think that that question deserves an answer. I'm not seeing too much coverage on it. But again, Accenture is kind of a bellweather here. When corporations decide to spend money on technology, Accenture often is one to see it first.

[00:04:20]They know when projects are being approved. They know when projects are being delayed, when budgets, you know, budgets expand or conversely get cut and when executives become hesitant, right?

[00:04:33]So they sit in the middle of the corporate technology spending. So in the last six months, investors are paying close attention to the following. Okay.

[00:04:43]When Accenture starts talking about slower client decisions yesterday, bookings are weak. Uh, look at bookings are the future, correct? That's what's in the pipeline for business and they tell that tells you kind of what's down the road. As I've said before, for the last several years, I think the markets have gone parabolic. Well, I not what I think. It simply has happened as investors have embraced a very simple narrative that AI spending uh as it explodes, technology spending will explode, consulting spending will explode, and everyone is going to be a winner. But what if they never saw uh what was coming and so obvious right in front of their faces? Let's think about what a consulting firm like Accenture actually does. They analyze information.

[00:05:35]They create reports, prepare presentations, they evaluate operations, build then they build implementation plans and provide strategic guidance.

[00:05:47]Historically folks, that required uh let's say a whole lot of highly paid, knowledgeable workers to perform those tasks. Well, guess what? The list I just described to you is exactly what generative AI is becoming increasingly capable of doing in place of those humans. It allows corporations to accomplish the same amount of work with fewer consulting hours. Projects that once required 100 consultants now might require 50 or even less. Efficiency created by AI actually reduces demand for some of the services traditionally sold by consulting firms as Accenture and the I think the implications here extend far beyond just this one company albeit it is a big company but before we go there let's let's zoom out for a second over the last year I've covered story after story involving AI we've talked about the mass massive debt spend for this data center buildout. We've talked about the billions of dollars that are being committed to debt and in debt financing by these hyperscalers, the metas, the oracles and all that. So um and of course across the industry but at some point investors stop buying the stories and they start demanding results. And I think this situation with Accenture is the markets, the investors um have taken a step back and they're realizing something. The company that was supposed to help corporations profit from AI just lost half its value in six months. So the markets as a whole are starting from my perspective to doubt the payoff and doubt the implementation and of course what the impact is going to be on all these companies not just Accenture but any company like that the impact what the impact will be. So if you guys enjoy the content leave me a like on the video.

[00:08:02]Please don't forget to subscribe to the channel uh and take a look at my news map risk map newsletter. I'll leave a link in the description below. weigh in on this. Uh, of course, the markets are kind of just, you know, brushing it off as a bad earnings report. Uh, the higherups, uh, in the company, of course, saying, "Ah, it's the Middle East impact and this and that. We're in a transformation phase. This is just a temporary event." How many times are we told it's just temporary, transitory, right? So, I will keep covering this and with that being said, appreciate you and I'll talk to you'all soon. Bye.