8. EPAM Systems Inc. (NYSE:EPAM)
5 Year Revenue CAGR: 16.44%
Average Upside Potential as of November 14: 5.52%
EPAM Systems Inc. (NYSE:EPAM) specializes in software engineering services, digital platform engineering, and digital product design, operating out of Newtown, Pennsylvania. EPAM is a founding member of the MACH Alliance. It offers a range of services including infrastructure management, operations, consulting, and digital design, and serves clients across various industries, including finance, travel, technology, and healthcare.
The company is actively investing in AI-driven solutions and capabilities to drive growth and innovation. Its three-pronged AI strategy includes internal transformation, client-focused solutions, and a robust partner ecosystem. Internally, it is investing in its workforce through AI-powered training and up-skilling programs to enhance efficiency and productivity. For its clients, it’s developing and deploying AI-powered solutions, such as EPAM DIAL, EPAM AI/Run, and EPAM EliteA, to address specific business needs. Additionally, EPAM Systems Inc. (NYSE:EPAM) is collaborating with key technology partners to accelerate AI adoption and deliver innovative solutions.
It has seen significant traction in AI-related projects, including the development of large-scale AI ecosystems and AI factories, the implementation of AI-driven transformation programs, and the creation of AI-powered tools like StatGPT. StatGPT, in particular, is a platform that leverages AI to access and analyze economic data using natural language queries.
The company’s third-quarter revenue for 2024 was up 1.34% as compared to the year-ago period and amounted to $1.17 billion. By investing in AI and leveraging its strong global delivery capabilities and deep industry expertise, EPAM Systems Inc. (NYSE:EPAM) is well-positioned to capitalize on the growing demand for AI-driven solutions.
White Falcon Capital Management stated the following regarding EPAM Systems, Inc. (NYSE:EPAM) in its Q3 2024 investor letter:
“IT services companies – Endava and EPAM Systems, Inc. (NYSE:EPAM) – have been the main detractors for our portfolio this year. Admittedly, we have been early. However, we have checked and rechecked our work and believe these businesses are nearing their bottom. In the appendix to this letter, we outline our investment thesis for Endava and explain why we think it deserves to be our top position in the portfolio. We believe Endava (and EPAM) present a compelling opportunity due to their (1) solid position in the growing IT services sector, particularly in digital transformation and AI implementation, (2) overall business quality and founder led management teams, and (3) cheap valuation where we believe they are trading for a trough multiple of trough earnings. Despite recent revenue challenges, these businesses have maintained positive free cash flow. In fact, EPAM has been on the offensive and used its cash reserves to make four acquisitions in the last 12 months taking advantage of the weak IT spending environment. With improving IT spending and a strong management team Endava and EPAM are well-positioned for recovery and long-term growth.”
