Goldman Sachs Research Report Analysis: IT Services 2Q Guidance Moves Toward Midpoint, IBM Becomes Preferred Safe-Haven
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Goldman Sachs Research Report Analysis: IT Services 2Q Guidance Moves Toward Midpoint, IBM Becomes Preferred Safe-Haven
Goldman Sachs believes. IBM is a relative beneficiary in the sector, with software business resilience coupled with enterprise AI demand giving it allocation value.
Navigating Web3 tides with focused insightsBy: Rita
TechFlow Guide
Goldman Sachs released its 2Q26 earnings preview for the Americas Technology IT Services sector on July 10, covering five companies: IBM, Cognizant, EPAM, Globant, and TaskUs. The core judgment is: 2Q earnings overall meet expectations, but macro uncertainty has begun affecting client decision-making since April-May, and companies will lower the upper end of guidance ranges, anchoring to the midpoint. Goldman Sachs believes IBM is a relative beneficiary in the sector, with software business resilience plus enterprise AI demand giving it allocation value; targets leaning towards discretionary spending like EPAM face greater downside risk.
Macro Uncertainty Is Compressing Earnings Guidance Space
Goldman Sachs clearly pointed out in the report that macro uncertainty has begun affecting the decision-making pace of IT services clients since April-May. Corporate CIOs are becoming conservative in spending decisions, with consulting and discretionary spending projects bearing the brunt.
The core evidence for this judgment comes from two places: first, continuous volatility in macro data; second, corporate clients' priority adjustments to AI budgets are squeezing traditional IT services spending. Goldman Sachs believes this impact is not short-term quarterly noise, but may persist throughout 2026. Therefore, all five companies will likely lower the upper end of guidance in their 2Q earnings reports, anchoring market expectations near the midpoint of the range.
IBM: Software Resilience + Enterprise AI Demand, Relative Beneficiary
IBM is the only target in the sector given a Buy rating by Goldman Sachs, with a target price of $335.
IBM's software business is the core source of resilience. Goldman Sachs expects 2Q software revenue of $8.16 billion, basically in line with market expectations, and full-year software revenue of $33.2 billion. Red Hat is expected to achieve double-digit growth in 2026, and Confluent integration is also continuing to advance. In an environment where overall enterprise IT spending is tight, the stability of core software is becoming a scarce attribute.
Enterprise AI demand is another differentiating factor. IBM's consulting + software hybrid model is being repriced by the market; it has both AI consulting implementation capabilities and AI platform products like WatsonX. Goldman Sachs believes IBM is increasingly being seen as a net beneficiary of enterprise AI demand.
Goldman Sachs expects IBM 2Q revenue of $17.86 billion, slightly exceeding market expectations of $17.84 billion; full-year revenue of $71.3 billion, with a year-over-year growth rate of about 5.2%. IBM's guidance for 2026 free cash flow may be around $16 billion, higher than market expectations of $15.9 billion.
EPAM: Largest Discretionary Spending Exposure, Hard to Have Surprises in Short Term
EPAM is the target for which Goldman Sachs is most cautious about short-term prospects in the sector, with a Neutral rating.
EPAM's business is concentrated in application implementation and consulting, precisely the sector most affected in this round of macro volatility. Goldman Sachs expects 2Q revenue of $1.41 billion, basically in line with market expectations; full-year revenue of $5.7 billion, with organic growth rate of about 3.2%, lower than the upper end of the previous guidance range.
More worthy of attention is the guidance. Goldman Sachs expects EPAM to narrow its full-year organic growth guidance from 2.5%-5.0% to 2.5%-4.0%. Before macro uncertainty is eliminated, EPAM's core business lacks short-term catalysts.
Other Targets: Within Goldman Sachs Coverage Neutral Ratings
Cognizant (Neutral, target price $75) is expected to have full-year revenue of $22.3 billion, with growth rate of about 5.1%. Goldman Sachs believes Cognizant benefits from clients' continuous demand for cost optimization; even if discretionary spending remains sluggish, outsourcing demand still has support.
Globant (Neutral, target price $60) is dragged down by Middle East geopolitics and consumer-related vertical industries (media entertainment, travel hospitality); Goldman Sachs expects full-year revenue of $2.48 billion, basically flat.
TaskUs (Neutral, target price $7) is most impacted by AI's shock to business process outsourcing; Goldman Sachs expects full-year revenue of $1.23 billion, with growth rate of 3.7%.
TechFlow Perspective
The most valuable judgment in this Goldman Sachs preview is not the specific numbers, but the industry structural differentiation it captured. Facing the same macro uncertainty, IBM and EPAM are moving in opposite directions; the former benefits from software stickiness and concentrated enterprise AI budgets, while the latter is burdened by the crowding-out effect of discretionary spending. This differentiation essentially reflects the "AI Budget Restructuring" that the IT services industry is undergoing: companies are cutting traditional consulting and system integration spending, moving budgets to AI-related software and implementation projects. This is positive for IBM, and pressure for EPAM.
In terms of valuation, IBM's current stock price is about $241, corresponding to 25x forward P/E, with a target price of $335; EPAM is about $130, corresponding to 8x forward P/E, with a target price of $110. The market's low valuation of EPAM itself is pricing in "earnings will not be good"; Goldman Sachs' judgment is that there are no trigger factors for expectation reversal visible in the short term.
Disclaimer
This article is a compilation and interpretation by TechFlow Research of a third-party securities firm research report (Goldman Sachs, July 10, 2026). The ratings, target prices, earnings forecasts, and related judgments cited in the text are the views of the securities firm analysts, representing only their affiliated institution's stance, not representing the views of TechFlow Research, nor constituting any investment advice.
The market has risks, decisions must be independent. This article should not be used as a basis for buying or selling any securities.
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