Accenture is Toast
Accenture is Toast
If you have ever listened to a Microsoft earnings conference call, you know that CEO Satya Nadella does a long quarterly highlight preamble followed by a massive data dump by CFO Amy Hood with many metrics being hard to reconcile by the average analyst. In fact, usually the analyst community questions revolve around commercial bookings growth and Azure growth within the quarter as well as the exiting last month growth rate. Very often, I go back and re-read transcripts in the ensuing weeks and months and find a data nugget I should have then or now paid more attention. Amy Hood said the following on April 25th:
“We expect capital expenditures to have a material sequential increase on a dollar basis, driven by investments in Azure AI infrastructure.”
Not one analyst asked just how “material” a jump were they contemplating? Microsoft’s stock has never really been a free cash flow debated story similar to Meta or Google, so why ask the materiality? Well, little did we know, until May 24th when Nvidia reported their earnings, that the capital spending was mostly all going to the leader in GPU’s. Nvidia guided sequential growth to rise from $7 billion to $11 billion in the upcoming quarter. In my thirty-year career, I have never seen such a revenue jump by any semiconductor company, period! Shame on literally every working analyst and PM on Wall Street for not reading Amy Hood’s comment as a precursor to this seismic sector moving event.
That said, most things seem evident in hind-site, don’t they? Today, I will predict an earthquake size change ahead, brought on by AI and Microsoft Co-Pilot that no one on the Street is talking about (at the moment) for the business consulting giant, Accenture. Pause for a moment and close your eyes and ask yourself, intuitively, do you think AI is a positive or negative for consulting companies?