The rapid advancement of AI tools has drastically reshaped how the consulting industry operates and how investors view companies in this space.

Consulting giants like McKinsey, Bain, and Boston Consulting Group have long benefitted from having thousands of consultants at its disposal with which it could deploy across countless projects around the globe. This scale gave leading consulting firms unmatched capabilities and expertise in solving some of the corporate world’s most complex problems.

However AI has changed this equation in recent years. What used to take a team full of analysts weeks to analyze can now be done in a matter of hours if not minutes by AI. New technology has not only made it easier for upstart consulting firms to compete with stalwarts, but has also provided potential customers a cheaper solution for improving their own operations.

This reality has become clear to consulting firms in recent years. Firms like McKinsey, Ernst & Young, and PwC have all laid off thousands of employees as they reevaluate their needs in today’s AI world.

Investors are also taking their stance when it comes to the consulting industry today.

The S&P 500 Professional Service Industry index, which tracks consulting and professional services firms, is down around 6% year-to-date.

One of the companies that has been impacted by AI-induced investor skepticism is consulting giant Accenture (ACN).

The company’s stock fell around 20% back in June following the release of its third quarter 2026 earnings report. The firm missed its revenue target and lowered its fourth quarter full-year forecasts.

Management cited lower sales in the Middle East due to the Iran War and softening demand in its federal business as the primary drivers behind the downgraded guidance.

This disappointing outlook only emphasized the market’s existing concerns around the future of Accenture and the consulting industry as a whole.

However these fears may be overblown.

Accenture is deploying AI at every level of its organization, to eliminate low-value tasks so its workforce can focus on more valuable activities and leverage AI tools for client services.

The company delivered $2.2 billion in AI-related bookings during its most recent quarter.

The company’s stock fell around 20% back in June following the release of its third quarter 2026 earnings report. The firm missed its revenue target and lowered its fourth quarter full-year forecasts.

Despite handedly exceeding the 12% corporate average, the company currently trades at a below-average Uniform P/E of 10x, with investors forecasting a decline in its returns in the next few years.

We can see this through Valens’ Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In other words, the EEA shows how well a company has to perform in the future to be worth what the market is paying for it today.

At current valuations, investors expect Accenture’s returns to decline to 27% by 2030, well below the returns it has delivered historically.

This signals that the market remains cautious about the sustainability of enterprise spending and AI disruption.

That said, Accenture’s global reach, high retention, digital capabilities, and AI utilization could support steady earnings and solid returns. Investors may be overestimating the threats to this business in the long run.

As long as that keeps happening, volatility looks more like an opportunity than a warning.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research

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