Key Highlights

● Third-quarter Revenue of about $5.7 billion rose modestly, mostly from acquisitions and resale.

● Adjusted Earnings came in at $1.49 a share.

● Bookings fell from a year earlier and fourth-quarter guidance missed expectations.

● The stock slid to close at $62.52 amid a software and services selloff.

Cognizant (NASDAQ:CTSH)'s third-quarter revenue rose, but most of that growth came from deals and resale, and a soft outlook and falling bookings sent the shares lower on Thursday.

Growth, with an asterisk

Cognizant Technology Solutions reported third-quarter revenue of about $5.7 billion on October 29, up modestly from a year earlier. Look closer, though, and the picture was less flattering. According to one report, acquisitions and resale revenue accounted for the bulk of that increase, leaving only thin underlying growth in the core business.

Adjusted earnings came in at $1.49 a share. The stock slid to close at $62.52, according to a market quote, ranking among the decliners in the Nasdaq-100.

Reports on the size of the move varied. One report described a steeper drop in premarket trading, while another headline described a milder decline. The shares appear to have pared some of their early losses by the close.

Bookings and guidance disappoint

Two other numbers weighed on the stock. Bookings, a measure of new contracts signed and a key indicator of future revenue for IT services firms, fell from a year earlier. And Cognizant's fourth-quarter guidance for constant-currency revenue growth came in below what analysts had expected.

For a consulting and outsourcing company, bookings are a crucial forward-looking signal. A decline suggests clients may be hesitating on new projects, which can translate into slower revenue growth in future quarters.

Why organic growth matters

Cognizant helps large companies run and modernize their technology, from software development to managing IT systems. Investors watch organic growth, meaning growth that excludes acquisitions, because it shows whether the core Business is winning new work.

When acquisitions do much of the lifting, it can mask slowing Demand underneath. Combined with weaker bookings and soft guidance, the quarter raised questions about the pace of client spending.

Software and services under pressure

Cognizant's slide unfolded during a rough day for technology services and software. ServiceNow (NYSE:NOW) suffered its worst day on record, closing at $109.67, and Fortinet (NASDAQ:FTNT) plunged to $139.10 after cutting its service revenue forecast. The software ETF IGV sank sharply.

Market commentary pointed to worries about AI-driven disruption as part of the selloff in software and cybersecurity, a theme that kept pressure on the broader technology complex throughout the session.

The broader tech sector was hit by Alphabet (NASDAQ:GOOGL)'s worst day since its 2004 IPO, which erased about $500 billion of Market Value and dragged the Nasdaq Composite down 365.13 points to 26,184.72.

A rotation underway

Outside tech, the market was healthier. More than 400 S&P 500 members rose, and the Russell 2000 climbed 28.71 points to 2,859.22. Health care led the sector table, followed by real estate, consumer staples and utilities.

"Money is rotating within the market rather than leaving it," one market strategist said, as quoted in market commentary.

Macro data showed third-quarter GDP growing faster than expected, with business Investment surging, and September PCE Inflation running hot. That kept traders focused on a possible December rate hike from the Federal Reserve.

What to watch

The key question for Cognizant is whether bookings can recover in the coming quarters. Investors will look for signs that clients are committing to new projects, especially around AI, and for evidence that organic growth is picking up.

The fourth-quarter guidance will serve as the near-term benchmark. On the broader front, Friday's Employment Cost index and the Fed's December 8 to 9 meeting will shape sentiment across technology stocks, while software peers' reports will show whether the sector's demand worries are spreading.