Pegasystems PEGA shares have surged 102.2% over the past year, significantly outperforming the Zacks Computer and Technology and the Zacks Internet - Software industry’s return of 29.2% and 10.8%, respectively.

Over the same time frame, it also outperformed its industry peers, including Autodesk ADSK, ACI Worldwide ACIW and Manhattan Associates MANH. Shares of ADSK, ACIW and MANH have gained 18.8%, 74.4% and 25.3%, respectively, in the trailing 12-month period.

This exceptional performance has left many investors questioning: Should We Buy, Sell or Hold PEGA stock?

While challenges persist, Pegasystems' strong platform and extensive artificial intelligence (AI) portfolio, enabling world-class businesses to attain transformative outcomes through real-time optimization, distinguishes it in the market. Its distinctive AI approach, Pega GenAI Blueprint, is a major driver of PEGA's expansion by showing clients how they can accelerate their digital transformation and achieve complete autonomy.

Pegasystems Inc. Price and Consensus

Pegasystems Inc. price-consensus-chart | Pegasystems Inc. Quote

PEGA Benefits From Innovative AI Portfolio

To better serve its clients, Pegasystems is always refining and modifying its AI products. The company unveiled the next generation of its industry-leading Pega Smart Dispute offering earlier this month. It includes new automation and generative AI features that help banks expedite the resolution of disputes and fraud claims for any kind of payment.

The general release of Pega InfinityTM 24.2 in October 2024 was a notable move. In addition to improving customer experiences, PEGA's most recent release of its core line of cloud-ready products offers new generative AI features and improvements that help businesses increase employee productivity and innovate more quickly. In June 2024, Pegasystems introduced Pega GenAI Socrates, a unique generative AI tutor that teaches clients and partners essential Pega skills dynamically.

The intense interest in PEGA's AI products, especially the Pega GenAI Blueprint, is drastically changing the company's approach to prospective clients. Using generative AI, the Pegasystems GenAI Blueprint creates the required parts in a few seconds.

In order to develop tailored workflows based on best practices for practically any scenario, such as managing patient care, processing insurance claims, and handling credit card chargebacks, the tool leverages Pega's decades of industry experience. Each conversation starts with a workflow designed for the digital age, which aids in optimizing broken legacy processes.

The blueprint has become a standard part of almost every conversation with clients and prospects. According to Pegasystems' third-quarter 2024 earnings, its Pega GenAI Blueprint has created more excitement and quicker adoption than any other offering in the company's history. Since going live in April this year, nearly 500 organizations have contributed to the creation of more than 30,000 blueprints.

Slower Transition to AI and Cloud May Hurt Pegasystems

Despite Pegasystems' positive narrative around its AI and cloud offerings, concerns linger regarding the slower-than-anticipated market adoption of these technologies. In the third quarter of 2024, the company highlighted the growing engagement with its AI-driven platform, Blueprint, as a key strategic initiative. While this adoption is growing, the ramp-up has yet to reach its potential at a pace investors would expect for a company focusing heavily on digital transformation and cloud migration.

The transition from legacy systems is complex and often requires significant client education and transformation, which could delay revenue recognition and limit immediate growth. This extended sales cycle may undermine short-term financial results, potentially causing downward pressure on the stock in the interim.

The Zacks Consensus Estimate for Pegasystems’ 2025 revenues and earnings indicates single-digit percentage growth for both. The stock has surpassed the consensus mark for earnings thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 50.2%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Zacks Rank

PEGA carries a Zacks Rank #3 (Hold), implying that new investors should not accumulate the stock now and existing investors should keep holding the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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