Teleperformance shares got off to a bad start on the last trading day of the week, losing over 3% in a Paris market that is nevertheless afloat. The stock is suffering from the fallout of the plunge by its American competitor Concentrix, which fell 22% in after-hours trading on Wall Street after publishing quarterly forecasts that fell short of expectations.

Concentrix, which published its results after the New York Stock Exchange closed yesterday evening, had a nasty surprise in store for its shareholders. While the results for the third fiscal quarter (the group closes its financial year on November 30) were broadly in line with expectations, the forecasts for the end of the year are mediocre.

The company guided toward lower earnings per share than the market had anticipated, namely $11.11 to $11.23, compared with a consensus of $11.69 and a previous target range of $11.53 to $11.76. The revenue forecast, however, is close to expectations.

During the presentation of its results, management was bombarded with questions about the deterioration in margins. It explained that profitability had been affected by excess capacity linked to customers affected by customs duties and by the acceleration of costly technological transformation projects. Management acknowledged that it would take several quarters for the situation to normalize, without guaranteeing a rapid return to previous profitability levels, which contributed significantly to the stock's decline.

Another source of caution is that Concentrix is heavily relying on its iX software suite, which integrates artificial intelligence tools (now present in 40% of new contracts). However, analysts remain skeptical about the return on investment, even though management has mentioned a modest accretive effect by the end of the year. The fear is that the AI gamble will consume a lot of cash without having an immediate impact on results. One analyst was also concerned about the dividend increase at a time when margins are falling and debt remains high. Management sidestepped the issue by assuring investors that it wanted to balance debt repayment, investment, and returns to shareholders. But the explanation was clearly not very convincing.

The stock market performance of Teleperformance and Concentrix depends heavily on their ability to convince investors that AI will not replace them, but will help them cement their positions and improve their results. When the market has doubts, the punishment is immediate, which today translates into a return of the French customer experience outsourcing specialist to new 11-year lows.