DXC Technology is a high-risk AI turnaround trading at 4.25x forward earnings, offering asymmetric upside if OASIS stabilizes revenue and restores margins.
Overview
DXC Technology is a global IT services provider formed in April 2017 through the merger of CSC and HPE Enterprise Services. It operates Consulting and Engineering Services, Global Infrastructure Services, and Insurance Software & Services, with revenue primarily generated from multi-year managed-service contracts and consulting engagements. **The investment case is a deeply discounted, speculative turnaround:** DXC trades at 4.25x forward non-GAAP P/E, 0.34x trailing EV/revenue, and approximately 41% free-cash-flow yield, but the discount reflects persistent contraction and weak execution. Q1 fiscal 2027 revenue was $2.999 billion, down 6.7% organically, while non-GAAP EPS fell 41.2% to $0.40 and missed consensus. GIS margin collapsed to 2.6%, although Insurance revenue grew 1.4% and SaaS revenue more than doubled. Management maintained FY27 revenue guidance of $12.10-$12.35 billion and non-GAAP EPS guidance of $2.40-$2.90, while raising FCF guidance to approximately $685 million because of the TCS litigation settlement. Near-term catalysts are OASIS scaling toward 125 environments, leadership execution, $400 million of bond retirement, and resolution of the IRS dispute. The base case offers a $16.91 five-year target, but the risk profile remains high.