If everything had gone to plan, Israeli tech company Amdocs (Nasdaq: DOX) would have published a positive outlook today for 2027, as part of its fourth quarter 2026 fiscal year financial results. There even would have been expected growth in revenue - something of an Achilles heel for Amdocs in recent years.
Instead, the company dropped a bombshell in the form of a legal dispute with telecom giant T-Mobile, which could lead to a 7%-11% decline in annual revenue by 2027, a 17%-25% drop in earnings per share, and a decline of as much as 26%-30% in non-GAAP earnings per share.
In response, Amdocs shares plummeted over 40% in premarket trading on Wall Street, reaching a price level not seen in over a decade. Nearly $3 billion was wiped off the company’s market cap, bringing its current value to $3.6 billion. Amdocs, which has been led by CEO Shimei Hortig in recent months, provides technology solutions to telecom and media companies.
What actually happened?
T-Mobile is a long-standing customer of Amdocs; with a business relationship spanning some two decades. In the 2025 fiscal year, T-Mobile was Amdocs’ second-largest client, accounting for 19.9% of the company’s revenue, worth about $900 million out of a total of about $4.5 billion. In early 2026, Amdocs announced the signing of another multi-year agreement with T-Mobile, aimed at integrating GenAI technologies into the telecom company. "Amdocs is proud to support T-Mobile by providing robust solutions and expertise that enable flexibility, efficiency, and growth... We are excited to deepen our collaboration," Amdocs stated at the time.
However, it has now emerged that shortly after, the atmosphere between the parties shifted. A year ago, Srini Gopalan, T-Mobile’s COO became CEO. He introduced a new strategy stressing digital transformation and AI, while focusing on streamlining operations, which has included laying off thousands of employees including some senior executives.
The drive to cut costs led to a re-examination of agreements with Amdocs, including the one signed recently. According to Amdocs, both companies have "Issued notices to one another, with each side claiming that the other has committed a material breach of one or more of the agreements under which Amdocs provides software and services to T-Mobile." Furthermore, these notices "include threats to terminate the agreements and/or to pursue financial or other remedies, potentially through arbitration."
Amdocs states that it is prepared to pursue its claims, though it emphasizes, as is the case with any legal matter (noting that formal proceedings have not yet commenced) that, "There is no certainty regarding the outcome." Consequently, the company has factored this into its fiscal year guidance, adopting a conservative approach.
Why have investors panicked?
Amdocs shares plummeted by more than 40% in after-hours trading, reaching price levels not seen since 2013 as the market is still struggling to digest the news. Analyst Timothy Horan of Oppenheimer, who, until this week, maintained an "outperform" rating on Amdocs with a price target of $105 (representing a 68% premium over the pre-plunge price), has downgraded the stock to "perform" (market perform) and removed the price target.
Horan wrote, "Exceptionally weak forecasts, reflecting a dispute with T-Mobile, overshadowed the results. While we believe Amdocs is well-positioned to leverage AI to drive significant improvements in the costs and operations of telecom companies, it also faces competitive and execution risks. The dispute with T-Mobile raises concerns that communications service providers are building or upgrading their systems 'in-house,' utilizing their own AI agents. T-Mobile is a leader in this regard, and others may follow a similar path."
Does this sharp decline present an investment opportunity? Investment advisor and analyst Lior Wider, who manages the information service "Machpil Revach" (P/E Ratio), explores this question. He says, "It is not every day that one sees a massive, long-established, and stable company on the scale of Amdocs plummet by a sharp margin - nearly 45% - in a single day. Naturally, an investor’s first reaction is to wonder whether this presents an exceptional buying opportunity driven by market panic. However, past experience suggests that in nearly 90% of cases, where a stock suffers a daily blow of this magnitude, the negative trend and bearish momentum tend to persist, as the market needs time to digest the material impact on forecasts."
Wider adds, "While it is difficult to predict exactly at what price level the stock will close today, looking a few weeks ahead, there is a high probability that it will trade at even lower levels, at least until the company demonstrates stability and restores investor confidence."
Will it sweeten the bitter pill?
Alongside its financial reports and forecasts, Amdocs also provided several business updates. In recent months, the company has been working on a strategy designed to foster innovation - a process that included the layoff of about 3,000 employees.
In addition to exiting non-strategic operations, such as its media business, Amdocs is now entering an entirely new industry. For years, there has been talk of Amdocs expanding its operations beyond the telecom industry, potentially into the banking sector. Instead, the company has set its sights on the insurance industry, announcing the acquisition of the US based EIS for $340 million.
EIS offers insurance companies a cloud-based platform and AI-driven agents. Amdocs believes that the insurance sector, a complex industry subject to stringent regulation, bears some resemblance to the telecom sector. It also appears to lag behind in the adoption of new technologies, presenting a clear opportunity. The acquired company operates in a space similar to that of Israeli firm Sapiens, which was acquired a year ago.
Concurrently, Amdocs has provided an initial glimpse into its fiscal year 2028 outlook, projecting a return to growth with single-digit revenue increases and high single-digit profit growth. The company also announced a 3% increase in its quarterly dividend.
Who loses and who profits?
Amdocs’ major shareholders include two US-based institutional entities: FMR (Fidelity), which held 9.4% of the shares according to the latest report, and Pzena Investment, which held 13.2%. Assuming these holdings have remained relatively stable, the value of Fidelity’s stake has dropped by $277 million following the earnings report, while Pzena’s stake has seen a decline of $392 million. According to SmartBull data, the holdings of Israeli institutional investors in Amdocs are virtually negligible.
Amdocs’ former CEO, Shuki Sheffer, who stepped down a few months ago, sold shares over the past few months worth about $22 million. These sales were executed at share prices significantly higher than the current level following the recent decline.
In financial results: the company concluded fiscal year 2026 (ending in late September) with a 3.6% increase in revenue, reaching $4.7 billion, in line with analysts' forecasts. Net profit was $497 million, a 17.2% decrease compared with 2025. Earnings per share was $7.41 - $0.01 below analysts' forecasts.
However, due to the legal dispute with T-Mobile, the outlook for fiscal year 2027 sees a 7%-11% decline in revenue, translating to $4.18-$4.37 billion, along with a 17%-25% drop in net earnings per share to $3.51-$3.88, and a decline of 26%-30% in non-GAAP net earnings per per share, to $5.19-$5.48.
Published by Globes, Israel business news - en.globes.co.il - on November 4, 2026.
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