Cognizant Technology Solutions has announced a significant enhancement to its share buyback program, increasing the total authorization by $2 billion. This decision, approved by the company’s board on March 25, 2025, underscores Cognizant's commitment to bolstering shareholder returns amid a challenging economic landscape. With this increase, the total amount authorized for share repurchases now stands at approximately $3.1 billion. The company also revealed plans to repurchase $1.1 billion worth of shares in 2025, which is an increase of $500 million from previous estimates. This move is indicative of Cognizant's strategy to return capital to shareholders while navigating fluctuating demand for IT services.

The announcement comes as Cognizant prepares for its Investor Day, where it will outline its long-term growth strategies and initiatives focused on artificial intelligence (AI) capabilities. Early trading saw a positive response from investors, with Cognizant's stock rising by 1.7%. The company has faced challenges recently, including economic uncertainties and high interest rates that have pressured corporate budgets and led clients to reduce spending on IT services. Additionally, Cognizant has projected its annual revenue to fall short of analysts' expectations, prompting a more aggressive approach to shareholder value through buybacks.

Cognizant's decision to boost its share buyback program also reflects ongoing pressure from activist investors like Mantle Ridge, which has been in discussions with the company since mid-2024. Mantle Ridge has acquired a stake valued at over $1 billion and is advocating for strategies that enhance stock performance. The increased buyback authorization is seen as a response to these pressures, signaling Cognizant's intent to improve its market position and reassure investors of its commitment to delivering value.

In conjunction with the buyback announcement, Cognizant is emphasizing its strategic focus on AI-driven technology transformation. The company aims to leverage AI across multiple sectors, enhancing operational efficiency and driving innovation. Cognizant's strategy includes three key vectors: enabling hyper-productivity across enterprises, industrializing AI deployments, and agentifying business processes through autonomous AI solutions. These initiatives are designed to position Cognizant as a leader in the evolving IT landscape while balancing growth investments with shareholder returns through disciplined capital allocation.