Shares of Cognizant Technology Solutions rose premarket after the company exceeded Q4 expectations and provided a positive outlook for 2026. This comes after a 10% drop on Tuesday, potentially linked to Anthropic's new plug-ins affecting IT Services stocks. The company's Q4 adjusted EPS hit $1.35, surpassing estimates, with revenue at $5.3 billion.

Cognizant's Q4 bookings grew 9% year-over-year, including twelve large deals, two of which were mega deals. CEO Ravi Kumar cited AI investments and a return to the “winner's circle” as key drivers. For 2025, revenue increased 7% YoY, and adjusted operating margin rose by 50 basis points. The firm plans to return $1.6 billion to shareholders in 2026.

Looking ahead, Cognizant anticipates Q1 2026 revenue between $5.36 billion and $5.44 billion. The company forecasts 2026 revenue of $22.14 billion to $22.66 billion. Adjusted operating margin is projected to be 15.9% to 16.1%. Cognizant's strong performance is a positive signal for the IT services sector.

This positive outlook, especially regarding 2026 revenue, signals confidence in Cognizant’s strategy. Investors are likely reacting favorably to the company's focus on AI and its ability to secure major deals. The increasing dividend and share repurchase program further demonstrate management's confidence in the firm's financial health, which is a good sign for long-term investors.