Bengaluru: Despite posting a strong first quarter and raising its full-year outlook, Cognizant is set to be dropped from the Nasdaq-100 Index after more than two decades, making way for a new crop of companies benefiting from the artificial intelligence boom.
The IT services company’s exclusion reflects its relative market capitalisation rather than its recent operating performance. With an intraday market capitalisation of about $24.5 billion on Friday, Cognizant’s valuation has lagged many peers even as investor enthusiasm for AI-native firms has surged over the past two years.
Nasdaq-100 Index Significance
The Nasdaq-100, which tracks the 100 largest non-financial companies listed on the Nasdaq exchange, is among the world’s most closely watched equity benchmarks. More than 200 investment products track the index, with over $800 billion in assets under management globally. Inclusion in the index often boosts visibility and attracts passive investment flows, while exclusion can trigger selling by index-tracking funds.
Analyst Perspectives
Analysts said the risk of Cognizant losing its place in the benchmark had been apparent for several months as its market value failed to keep pace with newer technology companies tied to AI infrastructure, cloud computing and semiconductor ecosystems. Some analysts also viewed Cognizant’s accelerated share repurchase programme over the past year as an effort to support shareholder returns and bolster market capitalisation amid concerns that it could be pushed out of the index.
Index Reconstitution
As part of Nasdaq’s annual reconstitution, Astera Labs, CoreWeave, Nebius Group, Rocket Lab and Teradyne will join the Nasdaq-100. They will replace Charter Communications, Cognizant, Insmed, Verisk Analytics and Zscaler.
The reshuffle highlights how rapidly the AI boom is redrawing the technology landscape. Investors have rewarded companies seen as direct beneficiaries of the AI buildout, while more traditional technology and IT services firms have struggled to match their valuation gains.
Cognizant’s Performance
For Cognizant, the move comes despite improving business performance under CEO Ravi Kumar. The company has positioned itself as an AI services provider, highlighted a growing AI-led sales pipeline, and reported improving demand across key verticals. However, those gains have not translated into the kind of market-value expansion seen among companies at the centre of the AI ecosystem.
In May, Cognizant’s board approved a $2 billion increase to its share repurchase programme and doubled its 2026 buyback target to $2 billion from $1 billion previously. The additional $1 billion in repurchases is expected to be completed during the September quarter.
The board also authorised a further $2 billion increase to the company’s existing stock repurchase programme, taking the total remaining repurchase capacity to about $3.4 billion.
For the March quarter, Cognizant reported revenue of $5.4 billion, up 5.8% year-on-year in dollar terms and 3.9% in constant currency. The company expects full-year 2026 revenue in the range of $22 billion to $22.6 billion, representing growth of 4.8% to 7.3%, and raised its operating margin guidance to 16%-16.2%.
While the company’s fundamentals have improved, the Nasdaq-100 reshuffle underscores the extent to which investor capital has gravitated toward companies building the infrastructure underpinning the AI boom.
An email sent to Cognizant did not elicit a response till press time.
