Analysts at financial firm Goldman Sachs (NYSE:) assessed the information technology (IT) services sector in the Americas in a report on Monday. They began to officially follow eight companies and highlighted that IBM (IBM) and Globant (GLOB) companies offer particularly attractive opportunities compared to potential risks. The report recognizes the challenges related to economic cycles and recognizes the promising future of the sector.
Analysts suggest that the IT services sector is currently facing a downturn due to general economic pressures and the reorientation of investments towards artificial intelligence (AI) related projects. However, they believe fears that generative AI poses a significant risk to IT services are overblown. Despite the technical challenges, AI is expected to have a positive impact, especially on services involving business processes.
The key point of the report is the distinction between challenges related to economic cycles and those that are fundamental and ongoing. Analysts believe the market is mistakenly treating these issues as the same thing, which presents an investment opportunity for some companies.
The “Goldman Sachs IT Services Investment Rating Methodology” examines companies based on their growth potential, profitability, fund management strategies and the current market perception of their stocks. “Buy” recommendations are given to companies that are not fully recognized by the market for their continued growth or their potential to recover from the current economic downturn.
Using this method, Goldman Sachs recommends buying IBM shares with a price target of $200 and Globant with a price target of $200. On the other hand, he recommends selling Thoughtworks and TaskUs shares, with a price target of $2.50 and $12 respectively, due to a less attractive balance between opportunities and potential risks. For the other companies – Accenture, Cognizant, EPAM Systems and Softchoice – the recommendations are “neutral”.
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