Agentic artificial intelligence (AI) company Kyndryl (KD) is on pace for its worst daily share price loss on record after its first-quarter fiscal 2026 earnings release. KD stock is down 19.9% this afternoon, easily surpassing its previous record one-day drop of -15.35%, set in May 2022.
The tech stock’s 20-day and 50-day moving averages recently completed a bearish cross, and today’s bearish gap has pushed KD below its 200-day moving average, as well. The stock’s 14-day Relative Strength Index (RSI) has dropped all the way to 17.39, deep into oversold territory.
The company reported disappointing revenue of $3.74 billion, missing Wall Street's consensus estimate of $3.83 billion, while posting a concerning 2.6% decline on a constant currency basis year-over-year (the consensus called for a modest increase).
Despite the revenue challenges, Kyndryl demonstrated notable improvements in profitability metrics, with adjusted EBITDA rising to $647 million and achieving a 17.3% margin, up from $556 million and 14.9% margin in the previous year. The company's strategic initiatives showed promising results, particularly in high-growth segments, with Kyndryl Consult revenue growing 32% to $3.2 billion and hyperscaler-related revenue surging 119% to $1.4 billion.
Management maintained its fiscal 2026 guidance, projecting adjusted pretax income of at least $725 million and an adjusted EBITDA margin of approximately 18%. The company's ambitious “triple, double, single” strategy aims to increase adjusted free cash flow to over $1 billion by FY28, with signings following the IBM (IBM) spinoff expected to represent 67% of revenue in FY26 and grow to more than 90% by FY28.
However, Kyndryl faces significant industry headwinds in the IT services sector. The company's balance sheet shows $1.5 billion in cash and $3.1 billion in debt, while free cash flow was negative at $222 million for the quarter.
Nevertheless, analysts rate the stock a “Strong Buy” overall, with Oppenheimer calling today’s plunge a buying opportunity. Likewise, JPMorgan and Scotiabank have backed their top ratings on KD today.
