Accenture's CEO indicated that the IT consulting firm's revenue in the coming months will fall short of expectations, triggering a 17% drop in its stock price.

Accenture CEO Julie Sweet

Key points: Accenture lowered its revenue forecast for the fiscal year, citing turmoil in the Middle East and market anxiety over its artificial intelligence business prospects, resulting in a 17% share price decline.

One of the world's leading professional services firms, Accenture PLC (stock code: ACN, down 17.81%), issued a warning that its annual revenue may be lower than previously anticipated, dragged down by business disruptions in the Middle East and investor concerns about the development prospects of its artificial intelligence business.

The information technology consulting company revised down its full-year revenue guidance and disclosed a $400 million revenue hit from its Middle East operations. Upon this news, its stock price plummeted 17% in early trading, hitting a near-decade low.

CEO Julie Sweet told analysts that the conflict involving Iran disrupted business in the region and created a ripple effect; due to the war, major corporate clients have been cutting back on non-essential expenditures.

Since the beginning of the year, the entire professional services sector has faced collective stock price pressure amid market fears that AI tools could replace some jobs within the industry. Investors are also concerned that Accenture's corporate clients will spend less than expected on information technology in the coming months.

Accenture, a top-tier industry player with nearly 800,000 employees globally, has seen its stock price fall 50% year-to-date. Other technology services firms have also been affected: International Business Machines Corp. shares fell 6% on Thursday, down 15% for the year; Accenture's rival Infosys Ltd has seen its stock plunge 40% year-to-date.

Accenture stated that some clients have delayed projects, originally scheduled for revenue recognition this fiscal year, to the next fiscal year, which begins on September 1.

Earlier this week, Morgan Stanley downgraded Accenture's stock rating and lowered its price target, citing caution over the company's acquisition strategy. The research report noted that investors are beginning to question the revenue growth potential of Accenture's several "product-oriented" acquisition deals.

Ahead of the earnings conference call, Accenture announced plans to acquire a majority stake in cybersecurity firm Dragos and fully acquire two other security companies.

However, Morgan Stanley's report mentioned that Accenture retains fundamental strengths for a long-term earnings recovery, though the timing of that recovery remains uncertain.

During Thursday's conference call, Accenture indicated that demand for large-scale projects remains strong. So far this year, the company has secured 104 client contracts with a value exceeding $100 million per quarter, a 13% increase year-over-year.