Accenture warns Middle East war is hitting consulting demand

Accenture said the Middle East war is now hitting consulting demand well beyond the region, cutting about $400 million from third-quarter sales there and forcing a lower fiscal 2026 revenue forecast. The warning sent its shares down more than 17% and dragged peers including Infosys, Cognizant, IBM and Capgemini lower, as investors weighed a softer spending backdrop against a $4.18 billion cybersecurity buying spree.

Chief Executive Julie Sweet said the indirect impact began in the last few weeks of the quarter, and she said it was still unclear how quickly conditions would improve. Accenture cut its fiscal 2026 revenue growth guidance to 3% to 4% from 3% to 5%, a clear sign that the pressure is not confined to the Middle East alone. In its conference-call transcript, the company said the slowdown showed up globally in Products and, to a lesser degree, Resources, mostly through discretionary spending, while sales in EMEA were also affected by longer decision-making.

The company’s latest numbers suggest corporate clients are becoming more selective. Phil Fersht of HFS Research said Accenture’s results show demand is concentrating around targeted AI investments while broader consulting and transformation spending remains under pressure. That split helps explain why one of the world’s biggest IT services firms can still find money for acquisitions even as its core advisory business loses momentum.

Accenture is betting that security spending will keep rising even if consulting budgets do not. It announced deals to buy a majority stake in Dragos and to acquire runZero and NetRise outright, part of a package worth $4.18 billion. The company said the purchases are meant to expand a cybersecurity business already worth about $10 billion and to deliver end-to-end operational technology security for power grids, pipelines, manufacturing sites, distribution facilities and data centers.

The acquisitions are also a defensive move in a more volatile operating environment. Accenture said AI and greater connectivity are widening the attack surface for critical infrastructure, while geopolitical risk is raising the urgency for stronger protection. The company said the transactions are expected to close in August or September if regulators approve them, and it plans to spend $9 billion on acquisitions this year, up from $5 billion, underscoring how aggressively it is trying to reposition its growth story even as investor anxiety deepens.