We recently compiled a list of the 10 Worst Performing IT Services Stocks to Buy According to Analysts. In this article, we are going to take a look at where Grid Dynamics Holdings Inc. (NASDAQ:GDYN) stands against the other IT services stocks.

The IT services industry constitutes a diverse range of technology-driven solutions, including consulting, software development, and system integration. Companies across various sectors depend on these services to enhance operational efficiency, strengthen cybersecurity, develop software solutions, manage IT infrastructure, and receive technical support and strategic guidance. The global IT services market is experiencing significant growth, driven by the rapid adoption of digital technologies, increasing IT investments, and the surging demand for cloud-based solutions.

According to Mordor Intelligence, the market is projected to expand from $1.3 trillion in 2025 to $1.94 trillion by 2030, reflecting a Compound Annual Growth Rate (CAGR) of 8.38% over this period. Their report highlights how businesses are embracing digital transformation to improve efficiency, enhance customer experiences, and drive innovation. Additionally, emerging technologies such as 5G, artificial intelligence (AI), blockchain, and augmented reality (AR) are reshaping the IT services landscape, with 5G expected to become the dominant mobile access technology by 2028. The rising adoption of the Internet of Things (IoT) and the shift toward remote work have further amplified the need for robust IT infrastructure. Meanwhile, the increasing complexity of IT environments is prompting organizations to outsource IT services, further fuelling market expansion.

A report by Grand View Research underscores the growing role of IT services in supporting Small and Medium Enterprises (SMEs) as they undergo digital transformation to stay competitive in the global market. The availability of cloud-based solutions has made it easier for smaller businesses to adopt advanced technologies without requiring significant upfront investments. Additionally, the IT and telecom sector is witnessing steady growth as telecom operators increasingly adopt cloud computing and other digital technologies to modernize their infrastructure and provide value-added services.

The U.S. IT services industry has delivered a strong performance so far in 2025. The S&P 500 IT Services Industry Index has gained approximately 5.0% this year, outperforming the broader S&P 500 benchmark, which has posted a negative total return of 1.6% as of March 4. The global IT services market is expected to maintain its momentum, supported by the widespread adoption of digital innovations, rising IT expenditures, and growing demand for scalable and secure IT solutions.

Our Methodology

To determine the 10 worst performing IT services stocks to buy according to analysts, we began by screening all U.S.-listed IT Services companies with a market capitalization above $300 million or stock price above $10, to eliminate smaller and more volatile stocks. Next, we sorted the companies based on their year-to-date (YTD) returns. Further, we selected companies which have a potential upside of 10% or more. Finally, we ranked the bottom 10 stocks based on YTD underperformance, placing the worst-performing ones at the top. Additionally, we also included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.

Note: All pricing data is as of market close on March 4.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A retail employee stocking shelves with consumer packaged goods/manufacturing products.

Grid Dynamics Holdings Inc. (NASDAQ:GDYN)

YTD Returns: -14%

Potential Upside: 30%

Number of Hedge Fund Holders: 15

Grid Dynamics Holdings Inc. (NASDAQ:GDYN) is a global digital engineering company that enables businesses to enhance their operations through advanced technology solutions. The company specializes in cloud computing, artificial intelligence (AI), data analytics, and software development, catering primarily to large enterprises in sectors such as retail, finance, and technology.

Grid Dynamics Holdings Inc. (NASDAQ:GDYN) is deeply positioned within the rapidly expanding digital transformation market, helping businesses migrate to the cloud, leverage data analytics, automate workflows, and develop innovative digital products to maintain a competitive edge. The company is currently experiencing significant revenue growth. In its Q4 2024 earnings report released on February 20, it posted a 28.5% year-over-year revenue increase, reaching $100.3 million—surpassing its own guidance range of $95-$97 million. This growth was largely fuelled by its Retail and Finance verticals, which expanded by 33% and 180%, respectively.

Following the earnings announcement, a Northland analyst highlighted the company’s best-in-class low-teens organic growth and an overall projected growth rate of 21% for 2025. Encouraged by Grid Dynamics Holdings Inc.'s (NASDAQ:GDYN) stronger-than-expected Q4 performance and optimistic guidance, the analyst raised the stock's price target from $18 to $24 while reaffirming an Outperform rating.

Overall GDYN ranks 8th on our list of the worst performing IT services stocks to buy according to analysts. While we acknowledge the potential of GDYN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GDYN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

 

Disclosure: None. This article is originally published at Insider Monkey.