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Amdocs (DOX) & Oracle's Partnership Secure Major Deal From AT&T

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Amdocs (DOX - Free Report) partnered with Oracle (ORCL - Free Report) in 2023 to shift DOX’s communication and media clients from a traditional storage framework to Oracle Cloud Infrastructure (“OCI”). Recently, AT&T’s (T - Free Report) subsidiary, AT&T Mexico, completed the migration of its Amdocs Customer Experience Suite (CES) systems to OCI.

AT&T has remained one of the long-term and major customers of DOX, accounting for 24% and 27% of Amdocs’ revenues in fiscal 2023 and 2022, respectively. Through this Oracle cloud migration, DOX will be able to provide fast and agile interactions at scale to this client.

This migration was carried out through Astadia, which was acquired by DOX in November 2023 for its top-end cloud migration capabilities. AT&T’s OCI arrangement will last for five years, with an option for the client to extend the duration afterward.

Amdocs Expands Cloud Capabilities Through Partnerships

Amdocs is trying to regain investors’ confidence through its prudent investments. One of its strategies is to partner with the industry leaders of the cloud market.

Amdocs recently collaborated with Alphabet’s (GOOGL - Free Report) Google Cloud and extended its partnership with Amazon Web Services (“AWS”). The company also received multiple customers to improve their products with DOX’s cloud expertise.

The partnership was for using Google Cloud technology to improve Amdocs’ Embedded Subscriber Identity Modules, while the company uses AWS for improving its Generative AI services carried out through amAIz AI.

With all these partnerships in place, DOX is increasing its cloud capabilities at a time when the cloud computing market is projected to witness a CAGR of 15% from 2023 to 2028, per the markets and markets report.

Moreover, the cloud migration project of AT&T’s CES assets to Oracle’s OCI will stabilize Amdocs’ revenues, given the project's long-term nature and AT&T's status as a major customer for Amdocs. So far in 2024, companies, including CellC, NTT Infranet and Magyar Telekom, have been added to DOX’s cloud customer base.

Amdocs Faces Macroeconomic Challenges

Shares of DOX have plunged 13.1% in the year-to-date period against the Zacks IT Services Industry’s growth of 4.4%.

DOX’s near-term prospects are affected by high interest rates and inflationary pressure softening the IT spendings of enterprises. This is also combined with increased scrutiny and postponement of IT deals by the companies.

Given the company's near-term challenges, investors should consider waiting for a more favorable entry point for Amdocs, which currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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