Kyndryl Holdings, Inc. has experienced a significant decline in its stock value, closing at $27.28 per share on December 24, 2025. This downturn follows the company’s disappointing booking reports in its consulting division, raising concerns about future sales growth. Kyndryl, which specializes in technology services and IT infrastructure, has seen its shares decrease by 22.03% over the past year, despite a one-month return of 7.23%.
In the third quarter of 2025, the Loomis Sayles Small Cap Value Fund released its investor letter detailing the fund’s performance and highlighting Kyndryl Holdings among its challenging investments. The fund recorded a return of 6.21% for the quarter, lagging behind the Russell 2000 Value Index, which returned 12.60%. Loomis Sayles attributed the underperformance in part to a shift in market leadership towards “risk-on” stocks, which often include lower-quality options.
Kyndryl, the largest third-party provider of data center operations, was spun off from IBM in 2021. The company has been focused on restructuring its business model, which initially suffered from low gross margins due to legacy contracts established by IBM. These contracts were designed to bundle lower-margin services with higher-margin hardware and software. Over the last three years, Kyndryl has worked to enhance its service offerings and re-price contracts as they come up for renewal.
Despite these efforts, the recent quarterly report revealed weak bookings specifically in the consulting sector, leading to skepticism about Kyndryl’s ability to achieve consistent sales growth moving forward. Loomis Sayles noted, “From an individual stock perspective, Kyndryl Holdings, Inc. detracted the most from performance.”
As of the end of the third quarter, Kyndryl was not featured in the top 30 most popular stocks among hedge funds. According to data, 24 hedge fund portfolios held Kyndryl shares, a drop from 36 in the previous quarter. The company reported revenue of $3.7 billion for the second quarter of fiscal 2026, marking a 1% decrease year-over-year.
While Loomis Sayles acknowledges the risk associated with Kyndryl, they express a preference for other stocks in the artificial intelligence sector, citing potential for greater returns. The investor letter indicates a belief that some AI stocks could deliver returns of up to 10,000% in the near future, overshadowing the prospects of Kyndryl.
In summary, Kyndryl Holdings’ recent performance has raised concerns among investors, particularly following weak booking reports and declining stock value. As the company continues to navigate its restructuring efforts, market analysts will be closely monitoring its ability to regain momentum in a competitive technology landscape.
