Key Highlights

● Cognizant closed at $62.52 on October 29 after a deeper premarket drop.

● Third-quarter Revenue was roughly $5.7 billion, with adjusted EPS of $1.49.

● Bookings fell from a year earlier, and fourth-quarter growth guidance trailed expectations.

● DXC fell sharply after cutting its full-year revenue outlook.

Cognizant (NASDAQ:CTSH) grew revenue in the third quarter, but falling bookings and a fourth-quarter outlook below expectations sent the IT services company lower.

A weak start that eased

Cognizant Technology Solutions had a rough Thursday, though not as rough as it first looked. Shares slid to close at $62.52 on October 29, according to a market quote, after an even deeper drop in premarket trading, according to market data. Reports of the size of the move differed widely depending on the time they were taken, but all pointed the same way.

The IT services and consulting company reported third-quarter results that showed growth on the surface and softness underneath.

Revenue up, momentum down

Revenue came in at roughly $5.7 billion, an increase from a year earlier. But a meaningful part of that growth came from acquisitions and resale activity, according to one report, rather than from Cognizant's core consulting and outsourcing work. Adjusted Earnings Per Share were $1.49.

Two other numbers did most of the damage. Bookings, which measure new contracts signed and act as an early indicator of future revenue, dropped from a year earlier. And Cognizant's guidance for fourth-quarter constant-currency revenue growth came in below what analysts had expected.

For a services firm, bookings are the pipeline. A decline signals that clients may be signing smaller deals, delaying projects or both, which is why investors reacted so quickly to the figure.

A tough day for IT services

Cognizant's slide fit a broader pattern among companies that sell technology services to large enterprises. DXC Technology (NYSE:DXC), another IT services provider, fell sharply after cutting its full-year revenue outlook, even though its quarterly revenue and earnings beat estimates. DXC chief executive Raul Fernandez said: "While our core revenue recovery will take time".

Software was under even heavier pressure. ServiceNow (NYSE:NOW) suffered its worst day on record, Fortinet (NASDAQ:FTNT) plunged after cutting its service revenue forecast, and the IGV software ETF sank sharply. Salesforce (NYSE:CRM) slid as well. One possible common thread was concern about the health of corporate technology budgets as companies direct more spending toward artificial intelligence.

The market's two moods

The Nasdaq Composite lost 365.13 points to 26,184.72, and the S&P 500 slipped 23.59 points to 7,720.39 as Alphabet (NASDAQ:GOOGL) suffered its worst day since its 2004 IPO. Information technology was one of only three S&P 500 sectors to fall.

The rest of the market was much healthier. More than 400 S&P 500 members rose, health care led all sectors, and the Russell 2000 gained 28.71 points to 2,859.22. NYSE advancers outnumbered decliners by 1.95 to 1. One market strategist said, "Money is rotating within the market rather than leaving it."

The economy also looked solid. Third-quarter GDP accelerated from the second quarter and beat forecasts, with Business Investment surging. That raised a question for services companies like Cognizant: if corporate Capital spending is so strong, how much of it is flowing to traditional IT services rather than to AI hardware and data centres?

What to watch

The next quarter's bookings figure will be the key signal for Cognizant. A rebound would suggest Thursday's number was a timing issue, while another decline would deepen concerns about demand. Investors will also track whether acquisitions continue to account for a large share of growth.

Peers reporting in coming weeks will help show whether the slowdown is company-specific or industry-wide. Friday's Employment Cost index and the Federal Reserve's December 8–9 meeting, where futures lean toward a hike, could also influence how corporate clients approach their technology budgets heading into 2027.