Accenture forecast takes hit from Iran war, shares tumble over 17%

Iran war hurts third-quarter Middle East business by $400 million
Accenture unveils $4.18 billion in industrial cybersecurity deals
Fourth-quarter revenue forecast is below market estimates

June 18 (Reuters) – Accenture (ACN.N), opens new tab forecast quarterly sales below Wall Street estimates on Thursday as the Iran war hampers its consulting business in the ‌Middle East and beyond, sending its shares down more than 17% and sparking an industry selloff.

The IT consulting giant took a $400 million hit to its Middle East business from the conflict in the third quarter and warned of “more impact in the fourth,” the latest evidence of how the war has upended corporate fortunes worldwide.

“The indirect impact really started in the last few weeks,” CEO Julie Sweet said on a post-earnings call. “It’s not clear how fast things will change, particularly because ⁠some of the industries are dealing with kind of longer-term issues.”

The automotive sector where Accenture has a large presence, for instance, was already struggling before higher gas prices from the conflict piled on more pressure, Sweet said.

Geopolitical and economic uncertainty have in recent months hit demand for IT projects, while concerns that autonomous AI tools could displace traditional software services have weighed on valuations across the consulting sector.

“Accenture’s results suggest demand is becoming increasingly concentrated around targeted AI investments while broader consulting and transformation spending remains under pressure,” said Phil Fersht, HFS Research’s chief analyst.

Shares of rivals Infosys , Cognizant (CTSH.O), opens new tab, and IBM (IBM.N), opens new tab slid between 5.7% and 10.5%, while Capgemini (CAPP.PA), opens new tab closed down 8.9% as Accenture also lowered its annual sales expectations.