IT services provider DXC Technology (NYSE: DXC) met Wall Street’s revenue expectations in Q1 CY2026, but sales fell by 1.2% year on year to $3.13 billion. On the other hand, next quarter’s revenue guidance of $2.99 billion was less impressive, coming in 3.3% below analysts’ estimates. Its non-GAAP profit of $0.77 per share was 9.5% above analysts’ consensus estimates.

Is now the time to buy DXC? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

DXC’s first quarter saw a sharp negative market reaction, as the company posted a year-on-year revenue decline and missed expectations for organic growth. Management attributed performance softness to continued pressure on discretionary project-based services, particularly within its core GIS segment, and admitted execution challenges in closing large deals. CEO Raul Fernandez acknowledged, “We didn’t get [the win rate]...I personally expected higher,” signaling a self-critical view of DXC’s competitive positioning and sales process effectiveness. Early internal AI adoption and investments in new platform offerings were highlighted as partial offsets.

Looking forward, DXC’s guidance reflects ongoing caution, with management projecting further revenue declines and only modest improvement in the second half of the year. CFO Rob Del Bene emphasized that the outlook assumes no change in the current macroeconomic environment, stating, “If macroeconomics improve, it will steer toward the high end of the guide; if they further deteriorate, to the lower end.” Management also stressed that contributions from new AI-driven offerings are expected to be limited near-term, with any material impact only factored in as adoption scales over future quarters.

Key Insights from Management’s Remarks

Management cited macroeconomic headwinds, execution gaps in large deal wins, and sluggish discretionary IT spending as major contributors to the quarter’s results, while highlighting early traction with internal AI initiatives and new product launches.

• Discretionary project weakness: DXC experienced ongoing softness in short-term, project-based IT services, especially in the GIS (Global Infrastructure Services) segment, which continued to weigh heavily on growth and bookings.
• Large deal win rate issues: While the company reached the final stages of over a dozen large competitive pursuits, management acknowledged a lower-than-expected win rate, attributing losses to challenges in demonstrating capabilities tailored to specific industries and client needs, rather than pricing.
• Early AI adoption internally: DXC launched company-wide access to enterprise-grade AI tools and internally tested AI-driven productivity programs, which CEO Raul Fernandez described as “customer zero” initiatives, aiming to sharpen both internal efficiency and external offerings.
• New AI-centric product launches: The company previewed Fast Track offerings like Core Ignite and OASIS, targeting banks and managed services with AI-native solutions designed for higher margins and recurring revenue.
• Insurance segment resilience: In contrast to project-based service lines, the insurance software business delivered high teens growth, benefiting from strategic customer migrations to the cloud and adoption of new AI-enabled smart applications.

Drivers of Future Performance

DXC’s guidance is shaped by persistent pressure in traditional IT services, cautious expectations for new AI solutions, and hopes for improved insurance software momentum.

• Continued project-based headwinds: Management expects ongoing weakness in discretionary IT projects across GIS and CES (Customer Experience Services), with no near-term recovery assumed in its forecasts. The company attributes this to macro uncertainty and delayed customer decision-making.
• AI-driven margin opportunities: While AI tools and Fast Track products are expected to improve productivity and eventually support margin expansion, management has taken a conservative approach to projecting their near-term revenue contribution, with CEO Raul Fernandez noting that initial impact will be limited and will scale over time.
• Insurance software as a bright spot: The insurance segment is expected to deliver progressive growth, supported by a pipeline of new customer contracts and increased adoption of AI-enabled platforms. Management believes this area could help offset declines in other segments as the year progresses.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will be monitoring (1) the pace of adoption and commercial traction for DXC’s new AI-native Fast Track products, (2) signs of stabilization or turnaround in the GIS and CES segments, and (3) sustained growth in the insurance software business. Progress on deal win rates and the execution of internal AI initiatives will also be key markers in assessing the company’s turnaround efforts.

DXC currently trades at $8.79, down from $12.01 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

Now Could Be The Perfect Time To Invest In These Stocks

ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.

Find out which 5 stocks it's flagging for this month - FREE. Get Our Top 5 Growth Stocks for Free HERE.

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.