3 IT Services Stocks to Buy Right Now From a Prospering Industry

Industry Description

The Zacks Computers – IT Services industry comprises companies that provide consultancy, communications software and services, IT management and operations, cloud-based web development platform, customer relationship management, professional information solutions, real estate information and analysis, and outsourcing services. Industry participants cater to a wide array of end markets, including manufacturing, telecommunications, banking, insurance, healthcare, government agencies and public sector institutions. They focus on the cybersecurity business, the cloud computing market, generative AI, IoT and automation to bolster prospects. Offerings from industry participants help improve engagement with customers, launch products and support new business models, with enterprises going for digital transformation.

What's Shaping the Future of the Computers - IT Services Industry

The Digitization Wave is a Tailwind: Most industry participants are modernizing their traditional legacy-oriented business processes to keep pace with evolving IT services. The aim is to integrate the coordination of emerging technologies, including cloud, IoT, AI and analytics. Increasing Internet penetration in emerging markets, particularly across the Asia Pacific, is another tailwind. 

Automation and Productivity Improvement: Enterprises are increasingly deploying AI to automate manual workflows, improve customer service, shorten development cycles and lower infrastructure costs. Higher productivity is also enabling IT service providers to increasingly adopt fixed-price and outcome-based engagements, creating opportunities for stronger operating leverage as AI-enabled delivery models mature.

Improving IT Spending to Aid Prospects: Improving IT spending trends bode well for industry participants. Gartner projects IT spending to increase 14.2% over the 2025 figure of $5.577 trillion to $6.369 trillion in 2026. Spending on IT services is expected to see a 5.3% improvement in 2026.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Computers - IT Services is housed within the broader Zacks Computer and Technology Sector. It currently carries a Zacks Industry Rank #98, which places it in the top 40% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. The aggregate earnings estimate revisions show that analysts are optimistic about this group’s earnings growth potential. Since Feb. 28, 2026, the industry’s earnings estimate for the current year has increased by a nickel.

Given the industry’s bullish prospects, there are a number of stocks worth buying. But before we present the stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags Sector and S&P 500

The Zacks Computers - IT Services Industry has underperformed the S&P 500 and the broader Zacks Computer and Technology sector in the past year. 

The industry has dropped 16.2% over this period compared with the S&P 500’s and the broader sector’s returns of 19.2% and 26.8%, respectively.

One-Year Price Performance
 

Industry's Current Valuation

On the basis of the forward 12-month price/earnings, which is a commonly used multiple for valuing IT Services companies, the industry is currently trading at 18.48X, lower than the S&P 500’s 19.91X and the sector’s 20.31X.

Over the past five years, the industry has traded as high as 39.95X and as low as 16.83X, with the median being 27.63X, as the charts below show.

Price/Earnings (F12M)

3 IT Services Stocks to Buy Right Now

Grid Dynamics: This Zacks Rank #1 (Strong Buy) company’s shares have dropped 13.1% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

Grid Dynamics is benefiting from rapid AI adoption and expansion of the GAIN platform. AI revenues reached 30.7% of total revenues and jumped 54.6% year over year. Customers are moving AI workloads from pilots into production, adopting GAIN more broadly and awarding GDYN new programs. Vendor consolidation is helping GDYN gain wallet share and larger programs at major customers. Hyperscaler partnerships with Google Cloud, AWS and Microsoft Azure are also supporting AI-led opportunities.

The Zacks Consensus Estimate for Grid Dynamics’ 2026 earnings is pegged at 42 cents per share, unchanged over the past 30 days. The figure indicates 5% growth from the figure reported in 2025.

Price and Consensus: GDYN

Telos: This Zacks Rank #1 company benefits from stronger-than-expected Telos ID adoption, with TSA PreCheck and the Defense Manpower Data Center programs performing above expectations. Telos has submitted proposals representing roughly $500 million of total contract value, concentrated mainly in Security Solutions, with award decisions expected over the coming quarters. These awards could become a meaningful growth driver, particularly for 2027.

For 2026, the consensus mark for earnings has increased by a couple of cents to 15 cents per share, which suggests 66.67% growth from the figure reported in 2025. Telos shares have decreased 7.6% year to date.

Price and Consensus: TLS

SoundHound AI: This Zacks Rank #2 (Buy) company is riding on the self-building and self-optimizing OASYS agentic AI platform, which is accelerating demos, RFP wins, pilot conversions and deal cycles. Growth has been broad-based across healthcare, financial services, technology and automotive. SOUN is seeing particularly strong momentum in healthcare and automotive/Asia, while channel partnerships are expanding distribution. The planned LivePerson acquisition could further increase its enterprise customer base and create OASYS cross-sell opportunities.

The Zacks Consensus Estimate for SOUN’s 2026 has improved by a couple of cents to a loss of 16 cents per share over the past 30 days. The company reported a loss of 13 cents per share in 2025. 

Shares of SounHound AI have declined 32% year to date.

Price and Consensus: SOUN

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This article originally published on Zacks Investment Research (zacks.com).

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