Nearshore Americas
Globant share price

Globant Shares Have Spent the Year Tumbling Amidst Soft Demand and AI Fears

Argentinean software company Globant is experiencing a steep decline in its share price, mirroring a broader trend in the IT services sector.

Globant’s stock has fallen 25% since the year began, generating concern among Wall Street investors.

This downward spiral coincides with weakening demand for traditional IT services. EPAM Systems, a competitor of Globant, slashed its revenue forecast precisely because of softening demand. EPAM’s share price has followed a similar trajectory to Globant’s, dropping by more than 30% since 2024 began.

While Globant exceeded revenue expectations for the first quarter of 2024, its forecast for the following quarter fell short of analyst expectations.

The company announced a revenue forecast of between US$585 million and US$589 million for Q2 2024, though analysts expected US$590.5 million.

Earnings per share (EPS) also fell short of expectations. Globant forecasts an EPS range of US$1.47 to US$1.52 for the second quarter. Analysts expected US$1.57.


A cautious clientele

Caution” has been one of the more used terms among C-suite executives when it comes to tech spend over the past year.

Several IT providers closed 2023 hoping to see more optimism for tech projects among their clients. That optimism has yet to consolidate, though.

There is certainly a lot of expectation around GenAI, while data and cloud are still seen as solid and even necessary tech investments. However, decision makers have yet to go all-out in their projects of tech transformation, kept at bay by a challenging macro landscape and much of the noise surrounding AI.

Financial data firm Bloomberg Intelligence highlighted EPAM’s downward revision of its 2024 revenue forecasts as evidence of persistent pressure on discretionary IT spending throughout 2024. Vendors such as Accenture and Globant itself closed 2023 warning investors about potentially weak demand deep into 2024.

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The rise of GenAI presents a double-edged sword for the IT services industry. The technology is regarded as a tool of great potential, with capabilities for disruption and operational efficiency seldom seen in business.

However, those very disruptive capabilities have caused a lot of concern among investors, who wonder about GenAI’s significance for the near-future of a traditional service model in IT and ponder the long-term health of the sector.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

1 comment

  • Hi Narayan,

    Your article about Globant’s recent challenges highlights the complex landscape we’re all navigating in the IT services industry, and I think it is SPOT-ON!

    These issues resonate deeply with us at TeamStation AI, as we’ve been anticipating and preparing for these AI-driven changes for years.

    We foresaw AI’s transformative impact on Nearshore and Offshore operations. Our mission was to create a single, all-in-one system that continually learns and adapts to the evolving talent market. This proactive approach has been our driving force, ensuring that our platform keeps pace with and leads the industry in efficiency, accountability, and velocity.

    Our integrated operations services, powered by Human-Centered AI and Neural search, offer US companies unparalleled control and visibility over their initiatives. We understand the pressures of maintaining a competitive edge in such a dynamic market, and our goal has always been to provide the tools necessary to operate more cost-effectively and confidently.

    Thank you for shedding light on these critical issues. It’s a challenging time, but we believe it’s possible to navigate these changes successfully with the proper foresight and technology.