Capgemini's slower sales hit shares, to invest 2 billion euros in AI
Reuters
Published Jul 28, 2023 01:43AM ET
Updated Jul 28, 2023 07:15AM ET
By Lina Golovnya and Stephanie Hamel
(Reuters) -French IT consulting group Capgemini posted weaker quarterly growth due to a slowdown across its regions, marked by a softer-than-expected U.S. market as clients cut costs.
Its shares were down 5% at 1050 GMT, the biggest decliner among French blue-chip stocks.
"The U.S. market is a little bit softer than what we expected. We see more clients in cost cutting in the U.S., and that basically has put a bit more pressure on the U.S. market," CEO Aiman Ezzat told analysts on a call.
Its second-quarter sales grew 5.2% at constant exchange rates, down from 10.7% in the first quarter. Revenue in the U.S., Capgemini's second-biggest market, was up 3% versus 6.1% in the prior quarter.
Clients were in a "wait and see" mode in some industries, especially in the U.S., Chief Operating Officer Olivier Sevillia said, adding they were not dropping deals but shifting the timing of orders.
"Maybe Q4 is a bit too early," Sevillia said about a possible tipping point. He expected demand to resume strongly once the tides turned.
Capgemini's half-year revenue rose 7.9% at constant rates to 11.43 billion euros ($12.53 billion) aided by demand for digital transformation, including artificial intelligence (AI).
"I am convinced that generative AI will play a major role in this transition," Ezzat said in a statement.
Generative AI, a powerful form of AI able to generate text, images, and other content, has become popular since the release of OpenAI's ChatGPT chatbot last November, increasing concerns over issues such as copyright, cybersecurity, privacy and AI replacing human jobs.
The company, which aims to help businesses to adopt AI technology through recent partnerships with Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) Cloud, said it planned to invest 2 billion euros in AI over three years.
This should double the workforce of its data and AI teams to 60,000 people, it said. The group's total headcount was 349,500 at end-June, down 1% from a year earlier.
($1 = 0.9122 euros)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.