Why EPAM’s latest earnings and AI push matter for investors

EPAM Systems (EPAM) is back in focus after reporting first quarter 2026 earnings that beat market expectations, lifting its annual profit outlook and spotlighting its push toward AI focused services.

The company reported first quarter sales of US$1,400.06 million, compared with US$1,301.69 million a year earlier, and net income of US$82.52 million versus US$73.48 million. Basic earnings per share from continuing operations were US$1.53, with diluted earnings per share at US$1.52, compared with US$1.29 and US$1.28 respectively in the prior year period.

Despite the upbeat Q1 figures and fresh AI announcements with Anthropic and ServiceNow, EPAM’s recent share price return has been weak, with a 30 day share price return of 22.34% and a 1 year total shareholder return of 42%. This suggests investors are still reassessing growth prospects and risks.

If EPAM’s AI push has your attention, it can be helpful to compare it with other AI focused opportunities by scanning 31 AI small caps

With EPAM’s shares down sharply over 1 year and trading at a steep discount to analyst targets and some intrinsic value estimates, you have to ask: is this a reset level offering upside, or is the market correctly pricing slower growth ahead?

Most Popular Narrative: 44.3% Undervalued

EPAM’s most followed narrative pegs fair value at $187.24, well above the last close of $104.24, framing the current price as a deep discount.

The accelerating enterprise adoption of AI is driving a surge in demand for advanced data engineering, cloud migration, and platform modernization projects. These are areas where EPAM holds deep technical expertise, leading to increased revenue from larger and more complex client engagements.

EPAM's investments in AI native services, proprietary platforms (such as DIAL and AI/RUN), and upskilling of over 80% of its workforce have positioned it as a transformation partner for clients moving beyond pilot AI programs to large scale deployments. This supports sustainable revenue growth and the potential for improved net margins as EPAM moves up the value chain.

Want to see what sits behind that valuation gap? Revenue runways, margin rebuild, and a future earnings profile that assumes a very different EPAM. The full breakdown is in the narrative.

Result: Fair Value of $187.24 (UNDERVALUED)

However, this depends on EPAM avoiding AI and automation tools eroding demand for custom services, and on the company managing wage pressures and geopolitical risks in key delivery regions.

Next Steps

If the mix of risks and optimism around EPAM feels finely balanced, now is the time to review the details and decide where you stand. To see what the market currently views as the main upside drivers, take a closer look at the 2 key rewards

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.