The growing demand for IT services in management and implementation is fueled by the widespread use of cloud computing and its benefits, such as scalability, cost-efficiency, and automatic updates. Therefore, the global IT services market is expected to grow at a CAGR of 7.1% by 2034.
Additionally, using artificial intelligence and machine learning is becoming more prevalent in outsourcing services, providing greater efficiency and accuracy. Another trend in the market is the increasing use of nearshoring, where companies outsource to countries closer to the United States.
Against this backdrop, let’s compare two established IT services stocks to analyze which holds better upside potential: Wipro Limited (WIT) and CGI Inc. (GIB).
The Case for Wipro Limited Stock
Valued at $37.97 billion by market cap, Wipro Limited (WIT) operates as an Information Technology (IT), consulting, and business process services company worldwide. It operates through IT Services and IT Products segments.
On February 13, 2025, WIT unveiled a strategic partnership with Veuu, a cutting-edge healthcare FinTech, to bridge the gap between providers and payers by transforming the payment process with an AI-powered instant payment platform. This collaboration marks a significant alliance in the healthcare sector, delivering essential improvements to claims payments within the industry.
WIT has gained 6.8% over the past month to close the last trading session at $3.63.
In terms of the trailing-12-month EBIT margin, WIT’s 16.66% is 206.8% higher than the 5.43% industry average. Likewise, its 14.26% trailing-12-month levered FCF margin is 19.5% higher than the industry average of 11.93%.
WIT’s gross revenue for the fiscal third quarter that ended December 31, 2024, increased marginally year-over-year to $2.61 billion. The company’s net income came in at $392 million or $0.04 per share, up 24.5% and 24.4% year-over-year, respectively.
Street expects WIT’s revenue for the fiscal first quarter (ending June 2025) to increase 2.7 % year-over-year to $2.70 billion. Its EPS for the same period is expected to grow 8.1% year-over-year to $0.04. In addition, it surpassed the revenue and EPS estimates in three of the trailing four quarters, which is promising.
Based on six Wall Street analysts offering 12-month price targets for WIT in the last three months, the average target price is $2.94, indicating a 19% change from the last price, with a high forecast of $3.50 and a low forecast of $1.55.
WIT’s POWR Ratings reflect bright prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
WIT is ranked #2 out of 9 stocks in the Outsourcing - Tech Services industry. It has an A grade for Stability and a B for Momentum, Sentiment, and Quality. To see WIT’s Growth and Value ratings, click here.
The Case for CGI Inc. stock
Valued at $26.98 billion by market cap, CGI Inc. (GIB) provides IT and business process services. Its services include business and strategic IT consulting, systems integration, and software solutions.
On February 17, 2025, GIB and the Volkswagen Group announced deepening their global collaboration. This move strengthens Volkswagen Group's long-term capabilities to expand its powerful IT infrastructure further in the future, leveraging GIB’s technology.
GIB has gained 17.6% over the past nine months to close the last trading session at $120.32.
In terms of the trailing-12-month gross profit margin, GIB’s 30.09% is 40.6% lower than the 50.65% industry average. However, its 16.48% trailing-12-month EBIT margin is 203.5% higher than the industry average of 5.43%.
GIB’s revenue for the first quarter that ended December 31, 2024, increased 5.1% year-over-year to $3.79 billion. The company’s adjusted net earnings and adjusted earnings per share came in at $449 million and $1.97, respectively.
Street expects GIB’s revenue for the second quarter ending March 2025 to increase 4.6% year-over-year to $2.84 billion. The company’s EPS for the same quarter is expected to be $1.50. Moreover, the company surpassed consensus EPS estimates in each of the trailing four quarters.
Based on 13 Wall Street analysts offering 12-month price targets for GIB in the last three months, the average target price is $126.51, indicating a 5.1% change from the last price, with a high forecast of $135.58 and a low forecast of $94.
GIB’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to a Neutral in our proprietary rating system.
GIB has a C grade in Value, Quality, Sentiment, and Growth. It is ranked #9 in the same industry.
Click here for the additional POWR Ratings for GIB (Momentum and Stability).
Wipro (WIT) vs. CGI Inc. (GIB): Which IT Services Stock Holds Better Upside Potential?
Several macroeconomic factors, including the increasing demand for cost-effective solutions, the need for specialized skills, and the rapid pace of technological change, drive the growth of the IT outsourcing market in the United States.
Leading IT services companies like WIT and GIB stand to capitalize on the optimistic industry outlook. However, WIT’s higher profitability and better upside potential favor it as the better stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Outsourcing - Tech Services industry here.
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WIT shares were trading at $3.63 per share on Monday afternoon, down $0.00 (0.00%). Year-to-date, WIT has gained 4.31%, versus a 4.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
Wipro (WIT) vs. CGI Inc. (GIB): Which IT Services Stock Holds Better Upside Potential? StockNews.com
