Shares in major consultancy firms have dropped sharply as investors fret over the impact of AI on the industry. Maria Ward-Brennan and Rosie Harris-Davison look at whether the threat is real.

A bloodbath is unfolding across the professional services sector as artificial intelligence (AI) hammers the shares of global consulting giants like Accenture, IBM and Capgemini and exposes cracks in their traditional business models.

Over the last year, US-Irish tech and management consulting giant Accenture, listed on the New York Stock Exchange (NYSE), has lost over 57 per cent of its value, with much of that loss occurring in the last six months. Across the Pond, shares in the French IT and consulting group Capgemini, listed on Euronext, have slumped nearly 40 per cent in the past 12 months. 

Within the same period, the London-listed legal group Gateley has plunged over 60 per cent, the New York-listed tech giant IBM is down nearly 12 per cent, and the NYSE-listed FTI Consulting has dropped by nearly 10 per cent.   

Investors fear that AI will force clients to ditch expensive consultants in favour of their own tech or cheaper options – and they are looking to the Big Four as a canary in the coal mine.

Despite overall revenues at the Big Four giants increasing, the consulting arms are seeing contraction, with PwC’s latest full-year showing a 3 per cent dip in its advisory arm, a similar decline at KPMG, due to a drop in spending by their blue-chip clients, some of which have been blamed on the speed and cost of new AI tools.

The listed giants, IBM, Capgemini, and Accenture, have all seen revenue growth in the third quarter of this year. Accenture pocketed $18.7bn (£14.2bn) in revenue, up about 6 per cent compared with the third quarter of 2025, whilst IBM saw a 9 per cent increase to $15.9bn (£12.1bn), and Capgemini’s revenues rose over 6 per cent to £5.1bn, up from £4.8bn in the previous quarter. 

Despite that, analysts at Morningstar have now downgraded firms such as Accenture and Capgemini due to AI-fuelled uncertainty about their future sales pipelines.

“Professional services firms are in a tough position currently, with an AI disruption cloud hanging over their heads,” said Michael Field, chief equity strategist at Morningstar. 

The falling share price tumble is raising eyebrows among shareholders, Field said, noting that “there is certainly a threat” from the impact of AI on the size of the overall industry fee pool.

“Investors are taking it very seriously by ultimately staying clear of many of these firms,” he added.

AI upending the consulting industry 

AI represents a potential double-edged sword for the consulting sector: both the biggest threat to its traditional business model and a potential driver of future revenue. 

Internally, professional services firms are feeling the stress of a decline in revenue from consultancy arms and the knock-on effect of AI, resulting in rounds of headcount being slashed, the largest at the Big Four giants.

Across the industry, investors and clients alike are weighing up whether AI will eliminate the need for consultants altogether, especially junior staff, whose administrative ‘grunt work’ is already being handed over to technology. For those still seeking external advice, the rise of boutiques and independent consulting firms is also putting pressure on the giants as clients turn to cheaper options.

As a result, the billable-hour system, which has been the lifeblood of the industry for decades, is at risk as clients expect their consultants to use technology to automate the most time-consuming tasks. 

Consulting firms, which have built their business on offering technology-driven services, are arguably the most affected. These firms are facing new competition from AI companies themselves, which are now not only selling their own software to their clients directly but also offering advice on how to implement it, a task typically handled by tech-driven consultancy firms.

“The market is no longer rewarding professional services firms simply for being dependable compounders,” Lale Akoner, market strategist at eToro, said.

“Investors want stronger evidence of revenue acceleration and margin discipline before assigning higher valuations again,” she added. 

With rising costs and a squeeze on budgets, clients are more cost-conscious than they were six years ago, and project-based revenues are now harder to defend in a market that prioritises visible earnings growth and margin resilience.

In May this year, OpenAI launched its own AI ‘Deployment Company’, a standalone business that embeds its AI engineers into businesses looking to implement OpenAI technology. 

The tech giant acquired AI consulting firm Tomoro and its team of over 150 engineers, and has already been backed by global investment and consulting firms, including McKinsey & Co, Goldman Sachs, and even Capgemini. 

“Sceptics [argue] the major AI players like Anthropic could yet launch their own consultancy services, optimised for their own service offerings,” said Akoner. 

Sector leaders push back against market doubts

Despite warnings from analysts and growing market fears over disruption caused by the technology, Accenture’s chief executive, Julie Sweet, in the firm’s latest financial results, said the firm continues to secure work from companies seeking advice on embedding AI into their business models.

“Accenture is at the centre of AI-driven reinvention, and we do not believe our current share price reflects that position or the strength of our business fundamentals,” Sweet said, adding that the firm is “acting decisively” to speed up shareholders’ returns whilst continuing to invest in the business.

Gateley chief executive, Rod Waldie, told City AM: “Our current share price level is frustrating and, we believe, is undervalued”. He stated that investors shouldn’t be wary of the professional services sector, which has proven profitable and resilient over many years and through many cycles.

City AM understands that FTI Consulting believes it is more immune to the pressures of AI as it claims its client base pay for expertise rather than repetitive and commoditised work.

Investment director at AJ Bell, Russ Mould, stated that the consultants are not taking this decline lying down. 

“Accenture has made several acquisitions, notably in cyber security, to broaden its offering, while many of the big names argue that they will be able to help companies understand how best to use, and make the most of AI, not be replaced by it,” he explained. 

Despite this, analysts stated that this does not mean this sector is “structurally unattractive”. 

“Firms with specialist expertise, recurring revenues, regulatory exposure or clear links to long-term digital transformation should remain well positioned,” explained Akoner. 

Field pointed out, “It’s not to say these firms are in immediate danger; most are still seeing decent sales growth.” 

“For the most part, we think many of the shares have huge upside potential. But, there is certainly a threat there, and investors are taking it very seriously by ultimately staying clear of many of these firms,” he added.