The consulting firms AI threat has wiped billions from sector valuations over the past year, even as the biggest names continue to post revenue growth. Accenture has lost more than 57% of its market value over 12 months, Capgemini has shed nearly 40%, and London-listed Gateley has fallen more than 60%, while IBM is down roughly 12% and FTI Consulting has dropped close to 10%.
Investors are questioning whether AI will allow corporate clients to internalise work they previously outsourced, compressing the fee pool that has underpinned the sector for decades.
The consulting firms AI threat takes shape on the revenue line
The share falls sit awkwardly alongside operational results that, on the surface, look reasonable. Accenture reported $18.7bn in Q3 fiscal 2026 revenue, up approximately 6% year on year. IBM posted $15.9bn for the same period, a 9% rise, and Capgemini’s revenues grew more than 6% to £5.1bn from £4.8bn the quarter before.
Dig into Accenture’s Q3 fiscal 2026 earnings release and the picture is more nuanced. New bookings for the quarter ended 31 May 2026 came in at $19.3bn, down from $19.7bn in the same period a year earlier. Diluted earnings per share rose 9% to $3.80, operating margin expanded 20 basis points to 17.0%, and free cash flow reached $3.6bn. The company returned $8.2bn to shareholders in the year to date.
Accenture now guides for full-year fiscal 2026 revenue growth of 3% to 4% in local currency, or 4% to 5% excluding an estimated one-percentage-point drag from its US federal business. Full-year GAAP diluted EPS is guided at $13.38 to $13.50, representing growth of 10% to 11% over fiscal 2025.
The Big Four tell a similar story: headline numbers holding, advisory arms contracting. PwC’s global revenue for the year ended 30 June 2025 reached $56.9bn, growing just 2.9% in US dollar terms, down from 3.7% growth in fiscal 2024 and 9.9% in fiscal 2023. Deloitte reported $70.5bn for fiscal 2025, up 4.8% in local currency, and EY posted $53.2bn, up 4%, both ahead of PwC. PwC’s advisory arm specifically recorded a 3% dip, with a similar decline at KPMG.
KPMG’s Australian practice offers a sharper illustration. KPMG Australia’s consulting revenues fell 18% for the year ended 30 June 2025, with total revenue of AUD $2.315bn (unaudited) and headcount down 6.6%, driven partly by a reduction in government spending on external advice.
Morningstar has downgraded Accenture and Capgemini, citing uncertainty over future sales pipelines. ‘Professional services firms are in a tough position currently, with an AI disruption cloud hanging over their heads,’ said Michael Field, chief equity strategist at Morningstar. ‘Investors are taking it very seriously by ultimately staying clear of many of these firms,’ he added.
A new competitor enters the market
OpenAI’s move into the space adds a structural dimension beyond the threat from clients automating in-house. In May, OpenAI launched its Deployment Company, capitalised with more than $4bn from 19 investment firms in a syndicate led by TPG, with Advent International, Bain Capital, and Brookfield as co-lead founding partners. The vehicle carries a reported valuation of $14bn and is built around Tomoro, an Edinburgh-based AI consulting firm created in 2023 that employs roughly 150 forward-deployed engineers who embed within client organisations to implement OpenAI’s models in production.
The model mirrors the approach pioneered by Palantir: engineers deployed inside clients rather than advice delivered from outside. McKinsey, Goldman Sachs, and Capgemini are among the backers.
‘The market is no longer rewarding professional services firms simply for being dependable compounders,’ said Lale Akoner, market strategist at eToro. ‘Investors want stronger evidence of revenue acceleration and margin discipline before assigning higher valuations again,’ she added.
The rise of the billable-hour model as the sector’s default revenue structure is also under pressure. Clients increasingly expect automation of time-intensive tasks, eroding the unit economics that have supported fee growth for years. Boutique and independent firms are picking up work at lower price points, compounding the squeeze on the larger players.
Sector leaders have pushed back. Accenture chief executive Julie Sweet said the firm ‘is at the centre of AI-driven reinvention’ and that its share price does not reflect the strength of its business fundamentals. On the deal front, Accenture has agreed to acquire majority stakes in Dragos, runZero, and NetRise to broaden its operational technology security offering. Russ Mould, investment director at AJ Bell, said the firm has ‘made several acquisitions, notably in cyber security, to broaden its offering.’
FTI Consulting argues its client base pays for expertise rather than commoditised work, making it less exposed. Gateley chief executive Rod Waldie told City AM the current share price ‘is frustrating and, we believe, is undervalued.’
Field stopped short of writing the sector off. ‘It’s not to say these firms are in immediate danger; most are still seeing decent sales growth,’ he said. ‘For the most part, we think many of the shares have huge upside potential.’ Whether the consulting firms AI threat crystallises into structural revenue loss, or remains a sentiment-driven discount, will become clearer as full-year 2026 bookings data lands in the autumn.
