Kyndryl Stock Surges 30% on AI Services and Hyperscaler Momentum

Kyndryl Holdings Inc.'s stock price climbed 30% following the release of second-quarter results for its 2027 fiscal year that exceeded Wall Street's forecasts. During the quarter ended Sept. 30, the company posted $3.9 billion in revenue, marking a 1.9% year-over-year decline but still outpacing analyst expectations by roughly $50 million. The revenue beat came largely from the company's Kyndryl Consult division.

Kyndryl, which separated from IBM Corp., historically derived the bulk of its earnings from infrastructure management services. The company established Kyndryl Consult in 2022 to pursue higher-value, higher-margin consulting engagements. In the second quarter, this unit expanded revenue by 4.2% compared to the prior year, though the company did not disclose a specific quarterly figure. Over the trailing 12 months, Kyndryl Consult generated $3.6 billion in total revenue.

A key indicator of future performance, signings for Kyndryl Consult climbed 19% year-over-year, a metric that likely fueled investor enthusiasm. Many of the engagements undertaken by this unit center on artificial intelligence capabilities. Kyndryl Consult assists organizations in constructing AI agent ensembles and establishing training data generation systems. The division also provides guidance on strategic matters, including how enterprises should structure their AI spending.

To support its AI service offerings, Kyndryl operates a software platform named Bridge. This platform grants AI agents access to business data housed within an organization's internal infrastructure. Bridge also includes monitoring capabilities to verify that deployed agents comply with established safety protocols.

Public cloud services represent another pillar of Kyndryl's expansion strategy. The company's hyperscale-related revenue reached $500 million during the second quarter, reflecting a 27% increase from the same period last year.

Strong signings and continued growth in Kyndryl Consult and hyperscaler-related revenue reinforce our confidence in our fiscal 2027 outlook. Our performance reflects demand for Kyndryl's AI-led modernization capabilities and deep mission-critical expertise that help customers evolve their complex technology environments, strengthen cybersecurity and achieve measurable business outcomes.

Kyndryl Chief Executive Officer Martin Schroeter

On the bottom line, Kyndryl reported adjusted net income of $92 million, or 42 cents per share, surpassing the consensus estimate of 41 cents per share. This figure excludes a $38 million charge related to workforce reductions taken during the quarter as part of a cost-reduction program designed to generate annual savings of up to $500 million beginning in fiscal 2028.

Looking ahead, Kyndryl projects adjusted pretax income between $600 million and $700 million for the current fiscal year. The company anticipates revenue will remain essentially flat or grow by as much as 2%.